Maruti's commercial vehicle in two years

New Delhi, July 27 (IANS) Passenger car market leader Maruti Suzuki Saturday said it would enter the commercial vehicle segment by developing a diesel-powered light commercial vehicle (LCV) in the next two years.

"The board has given in-principle approval for developing the LCV. The segment looks very promising for both domestic and export markets. The volumes in this segment can be quite substantive," Maruti Suzuki chairman R.C. Bhargava told reporters here.

The company will develop a new version of Suzuki's LCV Carry which will be powered by a diesel and compressed natural gas (CNG) engine option.

Currently, Suzuki's LCV Carry, which is widely sold in Pakistan, Malaysia and China, is powered by a petrol engine.

The company said its engineers would require a time period of two years to develop the new product from the existing Carry platform as extensive tests and quality analysis would have to be carried out.

The announcement assumes significance as the company is known for its passenger vehicles and vans.

Carry was originally planned to be manufactured in 1982 when the production license agreement was signed between Maruti and Suzuki -- then two separate entities.

Carry was supposed to have been manufactured along side Maruti 800 CC and Omni Van. However, the plans were shelved due to lack of demand.

"There was an initial booking of only 2,000 for the whole country and at that time opening a manufacturing line with so less demand was not feasible," Bhargava said.

The entry-level LCV segment currently has many product offerings like Tata Motors' Ace and Magic and Mahindra and Mahidra's Maxximo, which have seen a substantial growth. The LCV segment had reported an increase of 14.04 percent in sales in 2012-13 at 5,24,887 units.

The company expects the sales to pick up due to good monsoon, which is expected to help the rural economy leading to higher off-take. Rural market accounts for 30 percent of the company's total sales and has been growing by 19 percent.

"A good monsoon should help. Then, there will be the festive season and the elections, which always helps," Bhargava said. However, he added that high fuel cost and slowing down of the economy would continue to hinder sales.

Maruti Suzuki had recently reported a 9.95 percent fall in its overall sales for the first quarter of 2013-14 at 266,434 units from 295,896 units sold in the corresponding quarter of last fiscal. Domestic sales went down by 6.80 percent at 245,346 units from 263,264 units sold in the first quarter of 2012-13

Exports declined by 35.37 percent at 21,088 units from 32,632 units shipped out in the corresponding period of last fiscal.

However, the company's net profits grew by 49 percent due to its cost reduction efforts, favourable foreign exchange rates and the gains from its merger with Suzuki Powertrain India.

The first quarter profit stood at Rs.631.61 crore, up from Rs.423.77 crore in the corresponding period of 2012-13.

Bhargava added that the company's initiatives like internal part localisation, employee suggestions and increasing efficiency through various ways helped in increasing its savings.

The company managed to save around Rs.350 crore during the last fiscal.

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