You are here: Home » Companies » News
Business Standard

Maruti Suzuki struggles to meet demand for Baleno

Export orders eat into domestic ones; if company doesn't increase production at the cost of other models, wait may go up to six months

Topics
Maruti Suzuki

Swaraj Baggonkar  |  Mumbai 

Maruti Baleno | Photo: Kamlesh Pednekar
Maruti Baleno | Photo: Kamlesh Pednekar

Customers who booked the Baleno, Maruti Suzuki’s latest premium hatchback, may have to wait for up to six months for delivery. The company is struggling to meet demand and production can only be increased at the cost of other models.

The country’s biggest car manufacturer is facing production constraints with the Baleno forcing it to juggle output between domestic and export markets. The Baleno is among the top selling cars with unserviced bookings of 55,000 units and sales of 44,000 units in just six months.



India (MSIL) started exporting the hatchback in January to Europe and Japan, leading to lower supply in domestic market, a consistent fall since December.

Maruti Suzuki struggles to meet demand for Baleno
Domestic volumes of Baleno dipped 41 per cent in March to 6,236 units, lowest since its launch, compared with 10,572 units in December, the best month so far.

This is even as the exports have more than trebled in the past three months to close at 5,600 in March from 1,800 in January, according to MSIL.

The company is running its plants in Haryana at near-full capacity, with incremental volumes coming only through improvisations such as debottlenecking. Increasing the Baleno’s production beyond this will mean sacrificing volumes of other models. “We expect to hit a capacity roadblock this year despite efforts at debottlenecking its stated manufacturing capacity of 1.55 million units. The Gujarat plant is expected to add 0.25 million units of capacity only next year,” said a Religare report.

MSIL has said the Baleno production expansion is going as planned but demand continues to outstrip supply. In addition, sources say, there could be issues in ramping up component supplies from the vendors. R C Bhargava, chairman, MSIL said, “When there is a surge in demand of a particular product, we have to make a judgment on what the long-term demand is going to be and what is the optimum mix. Capacity has to be increased, but by how much?”


While initial target was to increase total production to 150,000 units — 100,000 for the domestic market and the rest for exports — Bhargava said, the management is confident of increasing production to beyond 160,000 units this year. MSIL will not take export orders beyond 50,000 units this year.

“It is obligation of the company to meet the demand. We have asked the management to tell us if they need any help. We are ready to provide it but it is important that a message goes out that Maruti is making the best effort possible to best serve the customer,” added Bhargava.

However, rivals could be cashing in on Baleno’s supply bottleneck. Hyundai has been able to grow its volumes and maintain its market share in the premium hatchback segment with i20, which is available with a waiting of 15-20 days. Rakesh Srivastava, senior vice-president (sales and marketing) Hyundai Motor India said, “The segment size of the premium hatchback has not grown. In that scenario, we were able to grow in volumes and held on to our market share of 35 per cent.”

Baleno’s successor, Vitara Brezza, which was launched last month, is facing a similar situation.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, April 15 2016. 00:56 IST
RECOMMENDED FOR YOU
.