Suzuki: boosts production capacity in India to 1.7 million units a year in 2013

In China, increasing annual capacity to 500,000 in 2015 while building a new engine plant in Indones

2011/12/21

Summary

 In India, which is the largest market for Suzuki, sales volume in the first half of 2011 declined by 10.6% year-on-year to 534,000 due to a strike at its vehicle plant and shrunk demand caused by the monetary tightening. For the full year of FY2011, the company estimates a sales volume of about 1 million at worst or about the level of the previous year (1.2 million) at best.

 In Japan, Suzuki lost sales by 50,000 in the first half of FY2011 due partly to decreased sales of mini vehicles caused by the Great East Japan Earthquake. The company expects that the FY2011 full-year sales volume in Japan would fall slightly below that of the previous year to 586,000.

 On the other hand, in China and ASEAN countries, the company has been expanding sales, planning to enhance production. In China, it will build a new plant, boosting production capacity to 500,000 a year in 2015. In Indonesia, it will construct a new engine plant with production capacity of 100,000 a year.

 Also in India, the company expects demand and exports to increase in the medium and long run, planning to add second and third plants to the Manesar plant to boost production capacity by 500,000 to 1.7 million a year in 2013. In addition, it says that it would increase sales of high-priced vehicles including the Swift in India in the future to boost unit-sales price.

 In the first half of FY2011, Suzuki decreased global sales by 4.0% to 1.2 million; it registered decreased sales and operating profit in the first half for the first time in two years. For the FY2011 full year, the company revised its initial sales forecast downward by 100,000 to 2.71 million. For its earnings forecast, the company left unchanged its initial profit forecast because the influence of the flooding in Thailand is unclear (revenues are estimated to be 2 trillion 610 billion yen, which is about the same as the previous year. Operating profit is estimated to be up by 2.9% to 110 billion yen).

 Concerning its capital and business alliance with VW, Suzuki asks VW for termination of the contract and selling of Suzuki shares, while VW says that it would continue to hold the shares; both are currently in conflict. In November 2011, Suzuki filed for international arbitration.