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Rediff.com  » Business » 'Unless vendors keep pace, auto biz will be hurt'

'Unless vendors keep pace, auto biz will be hurt'

Source: PTI
November 15, 2010 17:20 IST
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A speeding carMaruti Suzuki India said on Monday the growth of auto industry could be hampered in future if component suppliers do not keep pace with vehicle manufacturers in capacity expansion.

"If the component industry does not keep pace as the original equipment manufacturers in terms of capacity expansion, then this will become the biggest bottleneck for the growth of the automobile industry," Maruti Suzuki India managing director and chief executive officer Shinzo Nakanishi said in a Confederation of Indian Industries event in New Delhi.

"The future seems very positive but are we ready to grab that opportunity? I want to say yes, but if I am honest, I am not sure. The challenge that the industry faces today is of scalability," he added.

Auto sales continued to break record for the fourth consecutive month in October, with total vehicles sold in the country last month stood at 14,60,655 units.

The overall sales in the domestic market during the month grew by 45.93 per cent from 10,00,953 units in the same month last year.

"Capacity is one of the biggest challenges. When we say capacity, it is not just production capacity, it is also management and R&D capacity," Nakanishi said.

Factors like rising incomes, aspirations and support from government policies are driving
the growth, he said.

Talking about the company's performance, Nakanishi said MSI is looking to increase its sales to 1.3 million cars in this fiscal.

"In 2009-10, Maruti Suzuki produced and sold a million vehicles in one single year. This year, we will stretch out and try to touch 1.3 million," he added.

Nakanishi said the company has announced huge investments to expand its capacities for assembly as well as engine manufacturing and emphasised that the component industry also needs to respond in the same manner.

MSI had announced to invest about Rs 1,925 crore (Rs 19.25 billion) to set up a third plant with an installed capacity of 250,000 units inside the Manesar facility.

Currently, it is investing Rs 1,700 crore (Rs 17 billion) on a second plant at Manesar, with an annual capacity of 250,000 units.

With completion of both the new units, the total output from MSI will be at 1.75 million units.

The company is also investing another Rs 2,500 crore (Rs 25 billion) on an engine plant and research centre in Rohtak.

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