“I will not be surprised if inflation has an impact on buyers on margins who can just about afford to buy a car with their disposable income,” Bhargava said. “These customers may defer their purchase. Affluent people will not have such problems.”
Agencies“This year will not be less challenging because of inflation, conflict between Ukraine-Russia and the shortage of chips, which is yet to stabilize,” he said.
Inflation may dent demand at the budget end of the car market, prompting buyers to defer purchases, although the price spiral will likely have a negligible impact on premium-segment sales, Maruti Suzuki Chairman R C Bhargava said.
“I will not be surprised if inflation has an impact on buyers on margins who can just about afford to buy a car with their disposable income,” Bhargava said in New Delhi. “These customers may defer their purchase decisions. Affluent people will not have such problems.”
Speaking at a ceremony on the allotment of land to Maruti Suzuki and Suzuki Motorcycle India, Bhargava said the last two years have been challenging for the automotive industry.
“This year will not be less challenging because of inflation, conflict between Ukraine-Russia and the shortage of chips, which is yet to stabilize,” he said. “Almost all auto companies will not be able to produce to full capacity.”
Separately, Bhargava focused on enhancing the self-reliance quotient for creating more jobs.
“The Prime Minister has been working on improving the ease of doing business in India. (The outbreak of) covid-19 and the Russia-Ukraine conflict have proven the wisdom of Atmanirbharata,” he said. “We have to continuously grow manufacturing, reduce costs, improve quality and build technological capability.”
To be sure, Maruti Udyog is looking at investing more than Rs 20,000 crore to set up its third and largest manufacturing unit in Sonipat (Haryana). Maruti Suzuki will make operational the first phase of the facility within the next three years. The company has completed the process of allotment of 800 acres of land in IMT Kharkhoda with HSIIDC (Haryana State Industrial & Infrastructure Development Corporation) and construction work will start immediately.
Suzuki Motorcycle India, too, has completed allotment of an additional 100 acres in the same district. Details of the two-wheeler maker’s investments at the site will be announced separately.
Together, the companies paid about Rs 2,400 crore for the site, which the state government claimed to be the largest ever land deal in the country. Chief Minister Manohar Lal Khattar said Haryana, once known as an agrarian state, has progressed in the industrial sector as well and today has become an investor-friendly destination across the globe.
“This agreement will write a new script for development in Haryana,” Khattar said, adding that the company should also consider shifting its corporate headquarters from Delhi to the state.
Maruti Suzuki has earmarked an investment of Rs 11,000 crore to make 250,000 units in the first phase. Overall, the Sonipat facility will have a total installed capacity of 1 million units, which will provide direct employment to 11,000 people.
“This is the biggest investment in car manufacturing anywhere in India. Subject to market conditions being favourable, we will reach full capacity in 8 years,” Bhargava said.
Maruti Suzuki has two other manufacturing facilities in the state in Gurugram and Manesar with combined production capacity of over 1.5 million units.
Maruti Suzuki’s sales in the last financial year increased 13.4% to 1,652,652 units. Demand in the local market has revived at a fast clip after the second Covid-19 wave.
But shortage of semiconductors continues to affect production for most automakers. Shortage of electronic components led to an estimated production loss of 270,000 vehicles, mostly domestic models, in 2021-22. The same year, Maruti Suzuki’s market share slipped to 43.4% from 47.7% in 2020-21.
Agencies
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