Maruti to spend big bucks on R&D to develop new models
Gone are the days when only two brands- Maruti and Hindustan Motors, used to rule Indian Roads. Now is a time when almost all the national and international auto giants have roped in their resources to tap the expanding Indian auto market. Sensing this increasing speed of inflow of global car brands in the Indian auto market, the Indian Car giant Maruti has decided to divert a part of its funds for research. Reason is to bring out car models that are at par with international brands.
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Maruti, the Indian car maker has decided to step up its Research and Development (R&D) expense from 1.1 percent to 1.3-1.4 percent of the net sales in 2011-12. The increase in R&D expense is seen in the backdrop of the rising launch of cars in the small passenger segment by other Indian and international auto majors. Notably, Maruti Suzuki has fifty percent share of the Indian car market and in order to maintain its hold over the market, the car company would, after an in-depth R&D launch new models that compete with global standards. The R&D expenses would be mostly on developing new models besides localizing and increasing the efficiency of the existing. However, the increase in R&D expense by Maruti would have its toll, though a little, on the capital expenditure of the company which is expected to touch Rs4000 crore.
Experts in the Indian auto industry welcome this move by Maruti and have rated it in the favour of the Indian customers hoping to buy Maruti cars. The R&D by Maruti will benefit the customers when the Indian auto Market is flooded with global brand vehicles available at almost the same prices. From the customer's point of view, it will be a win-win situation as following it Maruti would develop new models infusing global standards to its vehicles and the customers may taste Indianised international car specifications at Indian prices.
