Maruti considering Africa assembly plant

Maruti Suzuki, India’s largest carmaker by volume, is considering building its first overseas assembly plant in Africa in a bid to revive its exports.

The New Delhi-based carmaker is exploring new export markets and Africa is more or less untouched, said Maruti Suzuki chairman R.C. Bhargava. Maruti is targeting emerging countries to fulfill its plan to double exports in the next four years. “We will look at local assembly for two reasons. Firstly, there’s usually a tax advantage. And second, there’s pressure from governments in these countries to assemble models locally,” Bhargava was quoted as saying by Bloomberg.

A local plant would help Maruti drive down costs for buyers and boost sales in these emerging markets for basic models such as the Alto and M800. However, Maruti Suzuki may face obstacles setting up a plant overseas as a few countries may require local purchase of some components.

Maruti’s exports shrank to 10 percent from two years earlier as sales of its A-Star compact hatchbacks fell in Europe. Europe, which accounted for 70 percent of Maruti’s exports three years ago, now contributes to 30 percent as the debt crisis in the region affected demand.

Algeria is the biggest export market for Maruti, followed by Indonesia, Chile and Australia. Maruti is also present in South Africa, Morocco and Egypt.