Certain high-end components aren’t produced in India and have to be sourced from suppliers overseas that limits Maruti Suzuki’s localisation to 95 percent.
While Maruti Suzuki has always ensured to extensively localise its offerings, the Indian auto giant recently stated that the company will not be increasing localisation on its vehicles beyond 95 percent, as certain highly sophisticated parts need to be sourced from suppliers overseas. These sophisticated components need to be imported as there is no supplier base currently in the country and it is not possible to establish production for the same owing to economies of scale.
Maruti further said that the companies making these high-end components need a captive market that is not possible in a highly competitive market like India. Nonetheless, the automaker said that it already boasts of a strong supply base that brings in overseas technology to its products. At present, Maruti retails around 11 models in India with over a 100 variants and enjoys a market share of 45 percent. Each of its products sold in the country are 95 percent localised.
While Maruti is dependent on its strong supply base to churn out products, the manufacturer is also aggressively expanding in rural markets that is said to be the next major growth space for automakers domestically. Maruti will be penetrating into the rural markets by over 20 percent and is looking forward to having presence in around 1.5 lakh villages with sales looking promising in the long term, despite the weak monsoon forecast for the year.
For the 2014-15 fiscal, Maruti sold a total of 12,92,415 units of which 23 percent or 4,15,380 units were the company’s rural sales. The automaker currently has presence in 1.25 lakh villages, up from the 93,400 villages back in the 2013-14 financial year. In addition to its expansion plans pan India, Maruti will also be expanding its product portfolio this year with two new premium products (Fronx and Across) as well as major facelifts and upgrades across the range are also planned.