Maruti Suzuki Flexible Manufacturing Strategy Targets Demand Shifts

Maruti Suzuki Plans Flexible Production Lines

Maruti Suzuki will make all its new production lines flexible enough to switch between platforms and models in response to changes in demand, chairman RC Bhargava said in the company's annual report for FY26. The move is aimed at addressing capacity mismatches that emerged after the company adjusted production over the past several years to account for falling small-car sales and the rapid growth of SUVs. The subsequent recovery in small-car demand left the carmaker without adequate capacity for some models. By the end of March 2026, the country’s largest carmaker had 1.9 lakh pending bookings for vehicles it was unable to produce in sufficient numbers.

Production Flexibility Addresses Changing Demand

Bhargava said the capacity mismatch was the consequence of adjustments made over several years to cater to the decline in small-car sales and the expansion of the SUV market. The company is now remedying the situation by making all its new production lines flexible enough to permit changes in platforms and models as required. The approach is intended to give the manufacturer greater ability to respond when demand shifts between vehicle segments. The strategy also seeks to reduce the risk of production capacity becoming concentrated around models whose market demand later weakens, while allowing stronger-performing vehicles to receive additional manufacturing capacity when required.

Small-Car Sales Show Early Recovery

The changes have already started showing results, with small-car sales growing 35 percent in the first quarter of FY2027 as the company increased production of vehicles facing stronger demand. Overall sales increased 38 percent during the quarter, compared with 28 percent growth for the industry. Small-car sales had also grown 17 percent in the second half of FY2026 following the implementation of revised GST rates in September 2025. The improvement in demand has increased the importance of production flexibility, as the company seeks to respond more quickly to changing preferences between smaller passenger vehicles and SUVs without creating the capacity constraints experienced previously.

Manufacturing Capacity Expansion Continues

Maruti Suzuki is implementing the flexible manufacturing strategy while expanding its production footprint. Its installed capacity is projected to reach 2.9 million vehicles by the end of FY2027 and 3.65 million units by the end of FY2031. Two production lines have been commissioned at the company’s Kharkhoda plant in Haryana, while work is progressing on the third. The expansion is designed to increase overall manufacturing capacity while giving the company greater flexibility to adjust production according to market requirements. The additional facilities form part of a broader effort to align manufacturing scale with evolving demand across vehicle segments.

Hansalpur Facility Reaches One Million Units

At Hansalpur in Gujarat, a fourth production line with annual capacity of 250,000 vehicles has been commissioned. This has taken the plant’s capacity to one million units. The expansion strengthens the company’s manufacturing base in India and adds further capacity to its production network. Combined with the flexible production approach, the additional line is expected to provide more room to adjust manufacturing volumes as demand changes. The investment also supports the broader expansion of production infrastructure being undertaken across the company’s facilities in Haryana and Gujarat.

Sanand Investment Adds Future Capacity

The company has also begun work at a new site in Sanand, Gujarat, where it plans to establish an annual capacity of one million vehicles. The proposed investment at the site is Rs 35,000 crore. The new facility will add substantial production capacity as the manufacturer continues expanding its footprint in India. Alongside the developments at Kharkhoda and Hansalpur, the Sanand project is intended to create a larger and more adaptable manufacturing network. The planned capacity additions will provide greater scope to respond to changes in market demand while supporting the company’s longer-term production targets through FY2031.

Flexible Manufacturing Supports Production Mix

The flexible lines, combined with the additional capacity at Kharkhoda, Hansalpur and Sanand, are intended to give Maruti Suzuki greater room to adjust its production mix as demand shifts between small cars and SUVs. The strategy directly addresses the capacity imbalance created when production was previously adjusted in response to changing segment demand. With small-car demand recovering and SUV demand remaining significant, the ability to change platforms and models across new production lines is expected to become increasingly important. The expanded manufacturing footprint also provides additional capacity to support future sales growth while reducing the likelihood of supply constraints for vehicles experiencing stronger customer demand.

Frequently Asked Questions

What is Maruti Suzuki’s flexible manufacturing strategy?
Maruti Suzuki’s flexible manufacturing strategy involves designing new production lines so they can switch between vehicle platforms and models according to changes in market demand. The approach is intended to address capacity mismatches that developed after production was adjusted for falling small-car sales and rising SUV demand. The company said the strategy is already producing results, with small-car sales increasing 35 percent in the first quarter of FY2027 as production was increased for vehicles facing stronger demand. The strategy is also being implemented alongside major capacity expansion at facilities in Haryana and Gujarat.

How much production capacity is Maruti Suzuki targeting?
Maruti Suzuki’s installed production capacity is projected to reach 2.9 million vehicles by the end of FY2027 and 3.65 million units by the end of FY2031. The company is expanding capacity through developments at Kharkhoda in Haryana, Hansalpur in Gujarat and a new site at Sanand in Gujarat. Two production lines have been commissioned at Kharkhoda, while work continues on a third. Hansalpur’s capacity has reached one million vehicles following commissioning of a fourth line. The Sanand project is planned for annual capacity of one million vehicles with a proposed investment of Rs 35,000 crore.