Suzuki gets go-ahead for new Gujarat factory
Suzuki has secured approval to build a car manufacturing plant in Gujarat, India, with an initial capacity of 100,000 units and investment of 50 billion yen.
Suzuki Motor Corp has received approval to construct a new vehicle manufacturing plant in Gujarat, India, with investment totalling 50 billion yen. The Japanese company will build the factory through its subsidiary Suzuki Motor Gujarat Pvt., which will produce vehicles and parts exclusively for Maruti Suzuki India Ltd.
The contract manufacturing agreement, as outlined in Maruti Suzuki's filing to the Bombay Stock Exchange, allows Suzuki's local division to supply vehicles and components solely to Maruti for up to 30 years. Finalisation of the deal depends on approval from minority shareholders and regulatory authorities. Maruti Suzuki is seeking consent for Suzuki to be both owner and investor in the Gujarat facility, rather than Maruti itself.
Factory details and timeline
Suzuki announced in January 2014 that the Gujarat plant would require an investment of 50 billion yen, equivalent to around $417 million at the time. The initial annual production capacity is set at 100,000 vehicles, with all output reserved for Maruti Suzuki. Series production is scheduled to start in 2017, pending final approvals.
The Gujarat factory is intended to support Maruti Suzuki's growth in the Indian market, where it is already the country's largest carmaker. The structure of the deal, with Suzuki directly owning the plant and Maruti as the exclusive customer, is subject to shareholder scrutiny. Maruti chairman R. C. Bhargava previously stated the arrangement would allow Suzuki to handle investment risks while ensuring Maruti's supply requirements are met.
Context: Suzuki's position in India
Suzuki has a long-standing presence in India through Maruti Suzuki, which dominates the passenger car segment with a focus on small, affordable models. The Gujarat investment comes after Suzuki resolved a lengthy dispute with Volkswagen, which ended with Suzuki buying back VW's stake in 2015. The new plant is expected to reinforce Suzuki's commitment to the Indian market, where demand for compact cars remains strong.
The approval for the Gujarat facility follows similar moves by other global manufacturers expanding production in India. For further context on recent plant developments, see Volvo secures Chinese approval for Chengdu factory.
