MSIL Studying the Feasibility of a Car Plant in South Africa

A top Maruti Suzuki official, speaking in anonymity told the newspaper that a decision on the South African plant will be taken in about 4-5 months. The plant will supply vehicles to nearby markets.

The capacity of the auto market of Africa is at a million units a year, half of which comes from South Africa. The Maruti plant maybe a manufacturing or an assembly plant. It is to be noted that Africa was the biggest export market for MSIL after the car market continued its decline in Europe. Maruti plans to setup a plant in Gujarat with an annual capacity of 250,000 units and top officials and large scale exports are planned from the region’s Mundra port.

Tata Motors began assembling vehicles in South Africa last year. It is reported that Mahindra, which operates in the region through CBUs, is exploring a CKD plant with a local JV partner and Hero Motorcorp is also looking at Nigeria and Kenya as potential destinations for a two-wheeler assembly line.

The plant in South Africa would be the first one outside India for Maruti. Suzuki Motor Corporation, which holds a 54.21% stake in MSIL had given the go-ahead to MSIL to expand operations outside India into other emerging markets this year. The reports reveals that an assembly plant in Sri Lanka has also been studied.

RC Bhargava, chairman of Maruti Suzuki says, “It doesn’t make a difference today if Suzuki invests directly or we do. A viability study is needed as we need to consider several factors before a plant in South Africa is finalised. Exports also need to go up as South Africa itself is a big market.”

About 1/5 Suzuki cars sold in the world, since the company’s founding in 1955, run in India.