Maruti’s Manesar plant is World’s No -3 in capacity

When the list of top 10 Automobile Plants in the World was compiled, there were two prominent entries from India – Maruti Suzuki India Limited’s factory at Manesar takes third place with a capacity of 620,000 cars per annum while Hyundai’s Irungattukottai plant takes the seventh place with a capacity of 550,000. While 90% of Maruti’s production is absorbed by the local market, the figure is a lot lesser for Hyundai which uses its Indian plant as an export hub for small cars. Interestingly, Suzuki’s Kosai plant ranks fifth, below Maruti’s Manesar plant. The ultimate however is Hyundai’s MASSIVE plant in Ulsan, Korea with a production capacity of 1,200,000 cars per annum. Speaking on the occasion, Puneet Gupta, market analyst at CSM Worldwide told that  “There is no plant in China like Maruti’s,”. China’s top plants only come in 8th and 10th places. He attributes the smaller output numbers at Chinese car plants to the manufacturers’ focus there on large and medium-size cars that require fewer units to achieve economies of scale, a key contributor to profitability in the car manufacturing business. The rankings are based on real production figures for that year and analysts say that the recession could have affected the rankings for 2009.

Last year, customers around the world bought 50.91 million cars, 2.4% down from 2008’s 52.17 million, according to a report by Scotia Capital. In contrast, the Indian market did well with customers buying 1.2 million cars in 2009, 12.5% more than the 1.05 million they did in 2008. Maruti Suzuki secured the fifth place in 2008 for its Manesar facility that made 640,000 cars that year while Hyundai’s Indian plant did not make it to the top 10. As the world moves out of the crisis, more Indian plants could make it to the top 10. In March, Renault-Nissan inaugurated its plant with an initial capacity of 400,000 units. Initially, 200,000 would be utilized while the maximum capacity will be achieved in due course. Moreover, manufacturers are looking at expanding their present facilities rather than going in for an all new plant. Managing supply chain operations in a developing country such as India is often a challenge and companies prefer to be near a supplier, explaining why they choose to increase capacity at existing factories, said an expert. “There is always merit in expanding an existing facility in a country like India,” said Kapil Arora, partner (auto practice) at audit and consulting firm Ernst and Young. For instance, when Maruti Suzuki decided to increase its capacity by 250,000 cars a year, it decided to stick to its Manesar facility in part due to the fact that most of its component suppliers are located in the Gurgaon-Manesar belt. Poor infrastructure is another reason why companies prefer to expand existing facilities.

Every job in a car factory translates into five new jobs in allied products and services, and so, in addition to tax breaks and cheap land, state governments often promise to build infrastructure around auto plants. India’s labour-intensive plants also mean that firms must manufacture more cars per plant to achieve global economies of scale, said another expert. “In India, scale can be hit at between 400,000 and 500,000 units,” said Vikas Sehgal, a partner at consulting firm Booz and Co. Managing these plants is very complex as they begin to resemble “mini cities”, he added. Sehgal estimates that in Europe and the US, car makers would have to roll out 250,000 cars a year to achieve economies of scale. That may explain why there are no US factories in the top 10 list. SIAM Related posts: Maruti Developing Hybrid and Electric Cars For Indian Market Maruti Suzuki is woking on hybrid and electric cars for… Breaking News-VW is No1 carmaker in the world According to market research and sales figures, it has been… Maruti planning to ramp-up Manesar facility Maruti Suzuki is set for expansion. Again. Maruti Suzuki… Automobile sales in India cross record 11,00,000 units in Jan 2010 India is definitely the hottest destination for automobile companies…. Maruti’s milestone – 10,00,000 units produced in FY 2009 India’s No.1 carmaker Maruti is the first Automobile company…

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Source:www.automobileheat.com 11/4/2010

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