Maruti looking to bring in more flexibility in its production processes

Maruti Suzuki India has said that it is looking to bring in more flexibility in its production processes in order to produce vehicles as per the evolving market scenario. The carmaker is looking to strengthen the production of its high-selling SUVs while curtailing the roll out of the entry level cars. This comes after the company noted that the recent dip in its margins happened because it was producing "some slow-moving cars".

The company's Executive Officer - Corporate Affairs, Rahul Bharti said in an analyst call that there are diverging demand patterns between utility vehicles and the small car segment. "The company is working on increasing the flexibility in operations to produce vehicles as per the evolving market demand," he added.

Bharti pointed out that the company did not have sufficient production capacity for the cars that had demand. "If we had the flexibility of both, whether it is semiconductor supplies or in-house production, we would probably have less of such a problem," he said. Hence, it's a conscious move to increase the flexibility of production operations, he added.

The company currently has an installed production capacity of around 23 lakh units per annum spread across its plants in Haryana and Gujarat. The introduction of production flexibility will come at a small cost as it involves a slightly suboptimal format of production.

Bharti noted that the company has seen reduction in first-time buyers. He also noted that the cost of acquisition has gone up disproportionately because of the increased regulatory intensity in the past few years. "And the income of the customer in this segment has not taken off. We are hoping that sooner or later, the income growth will catch up, and the small car segment will revive," he added.

As per SIAM data, entry level car wholesales in India have dropped to 35,000 units in the second quarter this fiscal as compared to the peak of 1.38 lakh cars in July-September 2018-19.

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