Maruti Suzuki is to delay the construction of a passenger car plant in the Indian state of Gujarat, citing the current slowdown of the local market.
The proposed new factory, which was to have been erected in Mehsana, would have been Maruti’s third car manufacturing complex. Its Gurgaon and Manesar plants are in the northern state of Haryana.
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“It is unlikely we would commission the unit in Gujarat by the end of 2015-16. The slowdown in the automobile sector is very acute,” Maruti chairman R C Bhargava told India’s Business Standard.
The Gujarat government set aside 700 acres for the plant in June last year, with Maruti at that time planning an investment of Rs 4,000 crore (US$584m) in the project. No work has commenced on the facility, which was to have an initial annual capacity of 250,000 units by 2015-16.
According to Business Standard, Maruti acquired another 700 acres of land in India’s north west earlier this year, this time in Vithlapur, relatively close to Mehsana.
Despite the slowing of sales in the Indian market, Maruti is pressing on with a capacity expansion at an existing plant – a third production line is due to begin operating at Manesar in September – and the launch of new models, including the recently announced Suzuki Stingray.
Manesar’s current capacity is between 850,000 and 900,000 units a year but with the addition of the new line, Maruti will have the ability to build up to 1.5 million units across its combined Gurgaon and Manesar sites.
Passenger car sales in India have declined for nine consecutive months, thanks to a slowing of economic growth to below five percent per annum and the recent plunge in the rupee to an all time low against the US dollar.
Author: Glenn Brooks
