Maruti to invest Rs. 15,000 crore to expand infrastructure

Maruti Suzuki is India's largest car manufacturer in terms of sales. The company managed to sell about 1.1 million vehicles in 2014-15 and plans to sell 2 million vehicles annually by 2020.

In order to support this plant, the company plans to invest a sum of Rs. 15,000 crore over the next five years. With this investment, it plans to procure land in order to double its dealership and service network, increasing the number of stockyards and warehouses and expanding its transportation infrastructure.

Maruti estimates that a total amount of Rs. 30,000 will have to be invested for expanding the infrastructure. Rs. 15,000, which about half of it will be invested by the company and the remaining, is expected to come from dealers.

The company expects most of its new dealerships and workshops to be set up on land owned by it. Maruti claims that dealers find it difficult to invest as the prices of land are very high and setting up showrooms and workshops on land owned by the company will be easier. The step will also ensure that dealers do not migrate to more profitable businesses in the future.

The Suzuki plant that is coming up in Gujarat is expected to be operational in 2017. Built with an investment of Rs. 3,000 crore, it will have an annual production capacity of 2,50,000 units. 

At present, Maruti Suzuki has a dealership network of 1,700 outlets. It has set up NEXA outlets to sell its premium vehicles and is planning to set up a network for commercial vehicles as well.

Source: Business Standard