Maruti Baleno struggling to cope with domestic market demand

Thanks to a high capacity utilization factor at the Manesar plant, the company can’t increase the Baleno output without affecting other products.Ever since Maruti Baleno’s export operations to Japan and Europe commenced in January this year, the automaker has been finding it difficult to cope up with the demand in the domestic markets. Thanks to the production constraint, waiting period for the hatchback in some cities stretches to up to 6 months.

In March 2016, the Baleno clocked 6,236 units in India which is the lowest ever monthly figure since its launch. That’s a decline of 41% compared to December 2015’s figure of 10,572 units (best performance by the hatchback so far). In stark contrast, the export volumes of the Baleno more than trebled from January (1,800 units) to March (5,600 units).

This trend clearly indicates that Maruti Suzuki India Ltd. is finding it difficult to increase the production capacity of the Baleno to cater to both export and domestic markets without any bottlenecks. The company’s Manesar plant is running almost at its full capacity and hence easing up more volumes for the Baleno would affect other models.

The company is adopting measures to increase the capacity but the demand continues to outrun the supply. Maruti’s inability to plug the demand-supply gap is helping the Baleno’s primary rival, the Hyundai Elite i20 which is available with a much shorter waiting period of 15-20 days. The volumes of the Elite i20 has been growing steadily and this is enabling it to retain its market share of 35% in the segment.

Maruti is expected to target a production capacity of 1.6 lakh units for the Baleno in its first year (10k up from the initial target). The company is expected to accept export orders of no more than 50,000 units). It’s to be noted that India is the only production base for the global B-segment hatchback.

This article has first appeared in Rushlane.com