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German automaker Volkswagen AG (VW) is looking to offer its greenfield plant premises at Chakan near Pune to other automakers for contract manufacturing, according to sources. Two prominent names that are possibly looking at contract manufacturing their models at the plant are Maruti Suzuki and Malaysian carmaker Proton. VW invested around Rs 4,000 crore in the Chakan plant, which started operations in December 2009. Production volumes have been low at the plant, which has spurred the company to look at options of sharing its facility with other auto makers. Currently, VW produces its Polo and Skoda Fabia at the Chakan plant, which will be soon joined by the Polo sedan. The plant has a maximum annual production capacity of 1.1 lakh units.VW's Chakan plant production was a little over 2,000 units for the first three months of 2010. On Tuesday, VW released its sales figures saying that the company has managed to sell 1,599 units of the New Polo since its launch early this year till date. It said it has so far received confirmed booking of 7,300 units. The chances of Maruti Suzuki sharing premises with VW looks strong, owing to VW's global association with Suzuki, wherein it picked up 19.9% stake to tap synergies in emerging markets and to develop and manufacture innovative and environmentally-friendly compact cars. Malaysian maker Proton has been studying the Indian market for long. Recently, Proton was reportedly testing its compact cars in the country and is looking at contract manufacturing and distribution agreement with a partner in India. An email sent to Proton went unanswered."The Chakan plant is currently at the run up phase. We are exactly going in line with our production plans. We started with Skoda Fabia, which later was joined by VW Polo, and there will be a sedan added to production soon," said a VW group spokesperson here. He did not comment on the contract manufacturing part, saying, "We do not comment on speculations."Maruti Suzuki is facing certain capacity constraints at the moment. The firm's plants at Gurgaon and Manesar are working at full capacity. The 2.5-lakh unit capacity expansion planned at Manesar is expected to come up not before March 2012. Currently, the firm can produce a total capacity of 1.2 million units per year. Shinzo Nakanishi, MD & CEO, Maruti Suzuki India, told FE recently that the company has "no plans as of now of contract manufacture at a third party plant." But industry observers believe that Maruti could just go for it to protect its market share till its capacity issue is resolved. Maruti Suzuki has been looking at de-bottlenecking its plants to meet the demand and make up for the lost share.
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