Wednesday, October 19 2005 15:01 Hrs (IST) - World Time -

Tokyo: Suzuki Motor, the world's biggest maker of minicars, will increase production capacity in India with its affiliate Maruti Udyog by one third by 2010 to meet competition from Hyundai Motor and Honda Motor.

Suzuki and Maruti, which sell one in every two cars in Asia's fourth-biggest automobile market, will have the capacity to make 1 million vehicles by 2010, in an expansion that may cost 470 million dollar, said Maruti's chairman Shinzo Nakanishi.

"Our expansion plans need to keep pace with the growth in demand,'' Nakanishi said today at the Tokyo Motor Show.

"We want to retain our 50 percent market share even when competition is increasing,'' he said.

India may match China's current demand for cars in four years if the south Asian economy grows at 8 percent a year, according to a 2004 study by Morgan Stanley's Asia economists.

As many as 2 million cars may be sold every year in India by 2010, so Maruti wants to have the capacity to produce at least 1 million units, said Nakanishi, who is also a senior managing director of Suzuki. The carmaker said it will introduce new sedans like the Esteem and minicars every year, adding to the nine already on offer, to maintain its 49 percent market share in India.

Suzuki, which also competes with Honda and Yamaha Motor in two-wheeled vehicles, said it will sell motorcycles with 125 cc engines in India by November, extending the plan to include scooters in future, Nakanishi said.

The company wills for more than double its annual production capacity of motorcycles and scooters to 500,000 units from the existing 200,000, he said without giving further details.

Suzuki withdrew from India's market in September 2001after it exited a joint venture with TVS Motor, India's third- biggest motorcycle maker.

"As the market grows further, we will introduce more models, and one day scooters as well,'' Nakanishi said. Suzuki has spent about Rs.200 crore to set up its motorcycle factory.