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New Delhi: Maruti Suzuki India Ltd (MSIL) has taken a significant step towards streamlining its production management by deciding to terminate the contract manufacturing agreement and acquire the shares of Suzuki Motor Gujarat Pvt Ltd (SMG) from Suzuki Motor Corporation (SMC). The move comes as the Indian car market continues to grow, and MSIL aims to increase its production capacity to approximately 4 million cars per annum by 2030-31, nearly double the current levels.
The termination of the contract manufacturing agreement was approved by the Maruti Suzuki Board of Directors, who recognized the challenges posed by managing multiple powertrains and different managements across various locations. To enhance efficiency in production and the supply chain, the decision was made to consolidate all production-related activities under MSIL.
“The acquisition of SMG’s shares is a strategic step to enhance efficiency in our production and supply chain operations,” the company stated. “As we prepare to increase our production capacity and adapt to evolving powertrain technologies, bringing all production-related activities under MSIL will enable us to navigate the challenges and capitalize on future opportunities effectively.”
The acquisition of SMG’s shares is subject to all legal and regulatory compliances, including obtaining approval from minority shareholders. The mode of acquisition and the consideration to be paid to SMC will be finalized in a subsequent Board meeting.
The acquisition will not immediately affect actual production, logistics, sales, or the associated costs. The cars that were previously supplied by SMG as a contract manufacturer will continue to be supplied as before, ensuring a seamless transition during the acquisition process, the company said
The move reaffirms Maruti Suzuki‘s commitment to staying at the forefront of the automotive industry, continually exploring and incorporating various powertrain technologies to meet the evolving demands of the market and customers. As MSIL prepares for a future with increased production capacity and diverse powertrain technologies, the acquisition of SMG’s shares is seen as a pivotal step towards a more efficient and integrated production management system.
