Maruti Plans to Take CKD Route to Ramp up Exports

Maruti Suzuki India Ltd. | Automobiles - Passenger Cars | Automobiles | BSE: 532500 | NSE: MARUTI

08 Dec 2011 Evaluate

Maruti Suzuki plans to start exporting select models as completely knocked down (CKD) kits, beginning with its new multi-passenger vehicle Ertiga, which it plans to launch at the Auto Expo in Delhi next month. Ertiga, a seven-seater MPV which will be available in 1.4-litre petrol and 1.3-litre multijet diesel engine options, will be initially shipped to Indonesia and later to Thailand. The CKD kits will include critical parts, such as engine and transmission, fuel tank, wheel rim, brakes, parts of suspension and steering that will be sealed and dispatched from the company’s Manesar plant.

The company, which produces more vehicles than its Japanese parent Suzuki Motor (SMC), is eyeing larger volumes in the lucrative export market. In Indonesia, where Suzuki enjoys a 9% share, Ertiga will compete with other sevenseater models such as Toyota Avanaza and Daihatsu Xenia. Cars dispatched as components and assembled in overseas markets invite lower taxes, making them more competitive. In Indonesia, where the import duty on fully imported cars is 26%, cars brought under the CKD route invite a much lower 10% tax. The move is aimed at strengthening Suzuki Motor Corp in the highly competitive South East Asian markets.

Maruti Suzuki, which is ramping up its production facilities in India to target annual production of 20 lakh units by 2015, will eventually export more cars under the Suzuki badge. It aims to double its vehicle and component exports in the next three years.