Indian auto makers seem to be heading to Africa en masse with South Africa seen as a gateway to unlocking the continent’s market potential. After Tata Motors, Mahindra & Mahindra (M&M) and Hero MotoCorp, Maruti Suzuki is now considering a South African plant from where it could supply to other nearby markets, top company officials told FE.
“An internal team will look at the feasibility of a plant in South Africa and a decision should be taken in 4-5 months. We see a lot of potential in Africa where there’s a market for around a million cars, half of which is in South Africa itself. We have not yet decided if it will be an assembly plant or a full manufacturing hub for the region,” a Maruti official said.
The move comes after Africa became the largest export destination for Maruti’s cars last year, replacing Europe which continues to grapple with an economic slowdown. Possible plans for a South African plant, which could be Maruti’s first outside India, follow a recent go-ahead from Japanese parent Suzuki Motor Corporation (SMC) chief Osamu Suzuki to expand the global footprint with Maruti in the lead in emerging markets — SMC has a 54.21% stake in Maruti Suzuki. Additionally, Maruti has also been looking at Sri Lanka for an assembly plant.
Maruti would likely use its over R7,000-crore cash reserves for its global expansion plans but overseas investments would depend on the tariff structure of the target country and the local value-addition possible.
Source :financialexpress.com
