Investment mania in India

  • 09-Jun-2008 12:49 EDT
Maruti Suzuki plant.jpg
Engine installation for the Wagon R at Maruti Suzuki's Gurgaon plant in India.

India's passenger-car market leader is scouting locations for a new research and development center while another automaker is preparing to expand an existing vehicle-assembly facility and add an engine manufacturing plant.

Maruti Suzuki, a subsidiary of Suzuki Motor Corp., will invest approximately 100 billion yen to construct a new R&D facility. Prospective sites in Haryana State are being investigated, but a construction start date has yet to be determined.

India is home to two Maruti Suzuki manufacturing plants. The Gurgaon plant started production in 1983, while the Manesar plant began vehicle assembly operations in 2006. Workers at the Gurgaon plant assemble a number of passenger cars, including the Maruti 800, Alto, Zen Estilo and Wagon R as well as commercial/multi purpose vehicles including the Omni, Versa, and Gypsy King. The Manesar plant supplies the market with the Swift, SX4 and other passenger cars.

"Maruti Suzuki is now investing 200 billion yen to increase the production capacity of the Gurgaon and Manesar plants to approximately one million units per year (by 2010). That is to say Maruti Suzuki would like to sell more than one million units in 2011," according to Kinji Saito, Deputy Executive General Manager of Global Marketing for Suzuki Motor Corporation.

In 2007, Maruti Suzuki had a 55.8 percent share of the Indian passenger car market with sales of 706,835 units. India's total passenger car volume in 2007 was 1,266,843. And while the automaker is strong in India, the company is also exporting vehicles from India to other locales. "In 2007, Maruti Suzuki exported 52,203 units to Africa and Latin America. Maruti Suzuki is planning to export A-segment cars to Europe and other regions (starting in) 2009," noted Saito.

The Gurgaon plant does some R&D work, and there are approximately 400 engineers presently employed by Suzuki in India. Other than the Maruti Suzuki operations, Suzuki Motor Corporation has two other manufacturing plants. Suzuki Powertrain India Limited produces diesel engines, transmissions and other powertrain components, while Suzuki Motorcycle India Private Limited makes two-wheelers.

Ford Motor Company will expand its manufacturing plant in Maraimalai Nagar near Chennai. The one million-plus square foot facility that opened in 1996 currently employs 2,100. Within the next two years, Ford India wants to begin producing a new small car from the plant - bringing the facility's overall annual production volume to 200,000 units by 2010. A new engine plant will be build adjacent to the existing vehicle assembly facility. Initial annual production capacity for both diesel and petrol engines is planned for 250,000 units.

"This new investment considerably increases our total investment in India to more than $875 million," John Parker, Ford's Executive Vice President of Asia Pacific and Africa, said. The new engine plant "will be Ford's first engine manufacturing plant outside of Europe with the ability to build diesel engines," according to Parker, who added, "We believe that the timing is now right to begin implementing a long-term strategy for India."

Ford India, established in 1995, is a wholly owned subsidiary of Ford Motor Company. The vehicle assembly plant's production includes the Ikon, Fusion, Endeavour and Fiesta, which are sold at 130 authorized dealers throughout India. Arvind Mathew, President and Managing Director of Ford India, said a substantial increase in local sourcing will occur and one of the factors tipping the investment scale in India is "Ford's confidence in the international standards and capabilities of India's supply base."

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