Maruti Suzuki to enter LCV segment soon

  • May 16, 2013
  • Views : 9805
  • 4 min read

  • By Et
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Buoyed by the success of Tata's Ace and Mahindra's Maxximo, the country's largest car maker Maruti Suzuki plans to enter the LCV market and is developing its first product codenamed Y9T that will be powered by an 800cc diesel engine



Rendition of the Maruti Suzuki LCV

Photo Credit: Thinkstock

The board of Maruti Suzuki, India's largest passenger carmaker, has just cleared a proposal to start manufacturing light commercial vehicles (LCV). Senior Maruti Suzuki executives communicated this decision at an offsite with its vendors in Malaysia last week. A new LCV codenamed Y9T is already under development and will compete head-on with the Tata Ace. It will be powered by a new 2-cylinder 800cc diesel engine, now in advanced stages of development. People close to the development said Maruti Suzuki's first LCV will roll out of its Gujarat plant, which goes on stream in FY16.

The new LCV is being developed ground up at the India research and development centre, a sign of the Japanese parent's growing confidence in the Indian subsidiary's R&D capabilities. Maruti Suzuki's new R&D facility in Rohtak is expected to go live next year. Suzuki has been progressively moving chunks of design and development for local models to India, starting with giving responsibility to the Indian R&D to come out with refreshes and facelifts.

However what could be a major change in tack is the company's consideration of having its own family of diesel engines, it so far relied on Italian car maker Fiat's multijet diesel engine, which powers hatchbacks, sedans and multi-purpose vehicle Ertiga. Four people close to the development told ET that the two-cylinder 800cc engine, a naturally aspirated variant for LCV and turbocharged variant for small cars are at an advanced stage of development. The company is also strongly considering extending the family of diesel engines to the 1.2-litre three-cylinder engine and 1.4-litre four-cylinder engine.

Tata Ace studio shot

The new family of diesel engines, if given a go-ahead by the management, is expected to complement Fiat's 1.3-litre multijet, say people close to the development. With Hyundai's new compact diesel offering hitting the market, Maruti Suzuki too should be looking in that direction, reasoned Deepesh Rathore, India MD for IHS Automotive.

"I think Maruti would definitely need to look beyond Fiat for the diesel engines.The Royalty that it pays to Fiat is significant, as volumes go up it becomes more expensive, so it makes sense for Maruti Suzuki to look at their own diesel engine family," added Rathore. A senior executive who did not want to be named said, "Bigger engines also cannot be ruled out, but there is nothing crystallised at the moment." Responding to ET's email query, a Maruti Suzuki spokesperson said, "As a policy, we do not comment on future plans and products."

The new LCV follows the success of the Tata Motors Ace, which now sells 2 lakh units every year. Mahindra & Mahindra's Maxximo is another competitor in this segment. Experts say both these segments open up new avenues of growth for Maruti Suzuki. The 0.75-1 tonne pickup truck is one of the fastest growing minitruck segments in the country, growing at a compounded annual growth rate of over 15-20per cent in the last five years. According to Frost & Sullivan, the small and light commercial vehicle space is expected to almost double to 8 lakh units by 2015-16, with small commercial vehicles making up for 70per cent of the total LCVs sold in India. "The company told vendors that its strong brand and network will help in achieving a healthy market share in the growing LCV space," revealed one of the vendors present at the annual meet.

Tata Nano studio shot

Even though the diesel segment has slowed down a bit after explosive growth earlier, many feel there is still untapped growth at the entrylevel segment. Tata Motors is developing the 800cc diesel Nano and Hyundai India will be launching the new hatchback BA with a 1.1-litre diesel engine. Maruti Suzuki had lost some market share for diesel cars in the last couple of years, hampered by capacity constraints. The carmaker has since announced an investment of Rs 1,700 crore in a new diesel engine plant in Gurgaon with a capacity of 3,00,000 units. The company also tied up with Fiat to source 1,00,000 units from the latter's Ranjangaon plant in Maharashtra.

For FY14, Maruti Suzuki is gearing up for sale of 4.65 lakh diesel cars and 7.5 lakh petrol cars, according to people in the know. The company hopes to increase its market share to 40 per cent in the next three years when the car market is likely to hit annual volumes of 4 million units, the company told vendors at the recent meet in Malaysia. Despite the tough market environment, Maruti Suzuki is aiming at a 10 per cent growth in FY-14, Having regained almost two hundred basis points market share in FY-13, the company is aiming to take it up to 40 per cent and hold on to it in the next three years, when market is expected to touch 4 million, the company informed vendors at the recent meet in Malaysia.

To that effect Maruti Suzuki will continue to launch two to three new offerings including one all new model or significant facelift every year. For FY-14, it will launching a new small car 'YL7' to replace 'A Star' and 'Zen Estilo,' which will eventually get a 800 cc diesel engine in FY-15. The company is also contemplating introducing Sx4 cross over or station wagon - YAD and XA Alpha SUV compact SUV.

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