Maruti Suzuki spent Rs 1,500 crore to buy 118 land parcels; here's why

Maruti Suzuki India is aggressively buying land parcels across the country for setting-up sales outlets and service workshops. In the last four years, the country's largest car maker has acquired a total of 118 land parcels worth over Rs 1,500 crore in India for better dealer viability and faster expansion. This happens to be the highest investment in dealership expansion by any automaker in the country.

"The company has acquired 118 land parcels for setting-up sales outlets and service workshops on the CODO (Company Owned & Dealer Operated) principle. Six pilot projects are being taken up across zones. During the year, the focus was to complete pre-construction activities and roll out the pilot projects in FY21," Maruti Suzuki said in its annual report for FY20.

Based on the learning from these pilot projects, the sales and service facilities will be built on rest of the acquired land parcels, it said. The company said that it will continue to work on this initiative in future with higher focus on setting up small service workshops to increase its service touchpoints.

Maruti is buying and providing land parcels to its network partners at reasonable rental rates, thereby preventing stress on their profitability due to rising lease rentals, the auto major said in its annual report. The company believes that network is one of the critical success factors and the land is the most important resource for its fast-paced expansion.

As of FY20, Maruti had 3,086 centres in its sales network, which consists of 2,390 Arena outlets, 375 Nexa outlets and 321 Commercial Vehicle outlets. The company markets models including Dzire, Baleno, Swift, and Alto in India. Its parent company Suzuki Motor Corporation is rapidly ramping up capacity at its new plant in Gujarat and plans to add 30 models by 2030, including electric vehicles. To support its sales, the company intends to take dealerships count up to 10,000.

For the full fiscal 2020, the company sold a total of 1,563,297 vehicles, 16.1 per cent lower than in 2018-19. In the domestic market, sales were down 16.7 percent at 1,461,126 units while exports were lower by 6 per cent at 102,171 units. Despite the decline, Maruti continues to control more than half of India's passenger vehicle market.

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