Steering through 2024 won't be easy for Maruti
₹38,200 crore. One is a new automobile production plant with an annual capacity of 1 million units, expected to start operation in FY29. The other investment would increase Suzuki Motor Gujarat Pvt.
Ltd’s (Maruti’s wholly owned subsidiary) annual production capacity to 1 million units from 750,000 units currently. This is to meet the potential increase in electric vehicle demand. Sure, this augurs well from a long-term perspective.
But in the foreseeable future there are bumps on the road as the passenger vehicle industry is expected to slow in 2024. Normalization in the supply chain has led to huge pending orders being met, which means a falling order book. Moreover, inventory levels are elevated.
As per the Federation of Automobile Dealers Associations, the average inventory for personal vehicles in December ranged from 55 to 58 days, or about two months. Adding to the woes for Maruti is that the entry level segment is still suffering. Maruti derives a large portion of its volume from the mini and compact cars segment–about 46% of its portfolio in FY24 (till December).
True, Maruti is expanding its offerings and capitalizing on the premiumization trend by launching utility vehicles. It introduced utility vehicles such as Fronx, Jimny and Invicto in 2023. But the intensifying competition from the likes of Tata Motors Ltd and Mahindra & Mahindra Ltd is keeping Maruti’s market share in check.
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