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-   -   Maruti to expand its capacity to 1.75 Million with the Manesar plant (https://www.team-bhp.com/forum/indian-car-scene/88483-maruti-expand-its-capacity-1-75-million-manesar-plant.html)

To keep pace with growth (which has been as high as 27% in this fiscal), Maruti Suzuki needs more capacity. Food for thought : At the time of Maruti's inception in 1983, everyone was skeptical of MUL ever achieving an annual volume of 100,000!

Current production capacity:

• Annual Capacity at Maruti Suzuki Gurgaon is: 850,000 units
• Annual Capacity at Maruti Suzuki Manesar is: 350,000 units

Total capacity : 12,00,000 units (1.2 million units)

Expanding Capacity:

• Maruti Suzuki will establish “Plant C” at Manesar. Plant C will be constructed concurrently with the Plant B at Manesar.
o Plant C to have an installed capacity of 250,000 units per annum. Plant C is likely to be ready by end of fiscal 2012 / early 2013
• Plant B (announced earlier in Feb2010) at Manesar, will be ready by Jan 2012 and will bring an additional capacity of 250,000 units per annum

Total Capacity: 17,50,000 units per annum by end of fiscal 2012-13

The Long waiting period for Maruti Diesel cars makes a lot of customers buy cars from their competitiors. Once Maruti gets this new updated plant running they will be looking at even bigger market share, especially with the all new Swift coming soon.

I went to the nearby dealer and they have put up a huge white board at the entrance with all the Maruti models mentioned.

You can't get a single Maruti car in less than 6weeks.

The diesel's have a minimum of 3 months that also the LXi variant and the K series Petrol Swift and Ritz both are 2.5months.

Good news

+ more investment from Maruti Suzuki
+ creates more jobs
+ creates more capacity, brings down lead time
+ makes the company to adapt aggressive sales approaches (dealers, service network, price plays etc)
+ makes the company to launch more products to expand the portfolio
+ might make company to look for alternative business models (offer assembly capacity to VW or other brands)

- does not solve the lead time issues in the short term (1.2M vehicles current capacity means actually there should not be any lead time for the products ==> current lead times are artificial or due to wrong forecasts.

- phased investment means the management is still cautious in developing the market and bridging demand-supply gaps

- if few product launches go wrong and few misplaced cycles of forecasting can increase the risks of having higher un-utilized capacities

- might have short term quality issues when the new plants go on production live.

- costs of the products can go up in short/medium term considering the ROI needs on these new factories.

One of the rare major markets in the world where one brand has around 50% market share.I see maruti holding onto that figure for quite sometime now,all the new entrants will only expand the market.