Maruti Suzuki is constantly working on fine tuning its petrol cars production as per the decreased demand and to cope up with the sudden increase in the demand of Diesel cars in India. This shift has come as a result of wide difference in the prices of Petrol and Diesel in India which has become all time high because of back-to-back petrol hikes every few months for past 2 to 3 years. With modern diesel cars delivering mileage of close to 20 KMPL and the diesel fuel being about 45% cheaper than petrol, the running costs of a diesel car is close to 50% as that of a petrol car in India. This has increased the demand for diesel cars in India besides the fact that Diesel cars cost around Rs. 1 Lakh higher than their petrol counterparts in India.
This steep rise in diesel cars demand and fall in petrol cars demand has led to unutilized capacity of petrol cars with India’s largest car maker Maruti Suzuki. With an annual capacity to make over 12.50 lakh cars every year with 8.80 lakhs petrol cars capacity, Maruti Suzuki is using only 70% of its petrol cars capacity because of the reduced demand for small petrol cars which has been the largest selling segment for Maruti Suzuki in past few years. Also weak Indian Rupee currency has caused increased costs of imports for Maruti Suzuki. To recover from this challenging situation, Maruti Suzuki will increase its petrol car exports to Africa and south-east Asian nations like Indonesia and Algeria. Maruti Suzuki has announced that it will widen its product portfolio in export markets and will increase the export volumes to offset the high cost of imports of components for cars.
This will also help Maruti Suzuki to increase its overall sales volumes and utilize its petrol car production capacity to optimum levels increasing its overall revenues and profits. In India, Maruti Suzuki is the second largest car exporter after Hyundai India which exported close to 2.3 Lakh cars in FY 2011-12 while Maruti Suzuki Indian export numbers were around 1.27 Lakhs.
Maruti Suzuki cars make a very good fit of the African and South East Asian markets as the price differential of petrol and diesel is not skewed there as it is in India and these markets also have high demand for small cars with low cost of ownership and high fuel economy. Maruti Suzuki will target to at least double its exports from India it wants to make full use of its installed petrol cars capacity in India. It may have to make changes to its new export products based on the target markets as per the legal and regulatory compliance norms which may take some time. At present some of the successful export cars from Maruti Suzuki India include Maruti Alto and 800 in North Africa and Maruti Ertiga in Indonesia. We will keep an eye on the new developments and will keep you updated on the same, stay tuned for more updates from Car Blog India.
via – Bloomberg
