Maruti Suzuki kick-starts Rs 15,000-crore land buying project

Desperate to maintain its stranglehold on the domestic car market, Maruti Suzuki, India’s largest car manufacturer, has started the process of setting up regional offices that will oversee real estate purchases for its future dealerships.

The company plans to buy properties and rent it out to its dealers instead of the latter making heavy investment in buying showroom spaces. This way, Maruti believes, it can minimise migration of investments by dealers who have been looking at opportunities in other commercial areas such as supermarkets or malls.

The New Delhi-based company has already procured office spaces in Jaipur and Mumbai and will add Kolkata, Bengaluru and New Delhi in due course. These regional offices will oversee purchase of land/showroom space within their areas and also act as a stockyard and spare parts warehouse.

A senior Maruti Suzuki official said, “We are now selling 1.3 million, (but) of course in future our business will grow. So, we need more stockyards — land for used cars, land for regional offices — those investments we need to make.”

The company is expecting sales to increase to two million units a year by 2020 from 1.1 million clocked in 2014-15. With a current market share of 40%, it believes that its existing retail set up will prove to be inadequate for future growth. To protect its dealers from rising real estate prices, the company would be making an investment of Rs 15,000 crore spread over the next few years.

The company’s official was talking at the opening of its Mumbai-based 99th showroom of Nexa which is owned by Shivam Auto. Nexa is a premium sales outlet by Maruti Suzuki, which sells Suzuki-branded premium cars.

Currently just two cars — S-Cross and Baleno — are sold through this new chain. More cars are expected to join Nexa in the coming period.

When asked if any existing Maruti branded products can be upgraded to Nexa he said, “In the future it may happen but it won’t be sold parallelly (both in Maruti and Nexa dealerships)”.

Maruti is preparing to enter the compact sports utility vehicle segment with the Vitara Brezza with a launch scheduled at the upcoming Auto Expo. Besides a new compact car Ignis will also be launched at the same event.

With new launches in full swing Maruti says it is on target to achieve the 10% sales growth this financial year which it set itself at the beginning of the year.