With the aim to cater to the buoyant small car market, production capacity would be increased by Auto major Maruti Suzuki India (MSI), which sells every second car in India, by additional 2-lakh cars in the next two financial years.

"As demand has increased and will only grow further, we would require additional capacity beyond the current 9-lakh cars a year to cater to the small car market. We will increase volumes to meet rising domestic demand and higher export orders," informed MSI managing director Shinzo Nakanishi.

Mr. Nakanishi however denied revealing the investment envisaged for the expansion to 12-lakh cars. Maruti would invest a sum of Rs 1,800 crore in order to increase the capacity by one lakh units to 10-lakh cars in this fiscal alone.

It should be noted that that MSI's plan will surely give a high to Indian auto market, especially when car companies Renault-Nissan, Mahindra & Mahindra (M&M) and Honda Motor Corp have reversed their expansion plans.

A total of 7.92 lakh cars last fiscal were sold by the largest carmaker in India and abroad as it dominates the small car segment with Alto, WagonR and Swift, which are among the five best-selling car models in India.

Maruti is expecting to outperform the industry with a 5% increase in domestic sales in the current fiscal over the 7.22 lakh cars it sold last year as the automaker is witnessing rising demand for compact cars from rural areas and overseas markets to boost sales.

MSI is mulling to ramp up its rural salesforce by an additional 1,000 executives this year with the aim to push sales in the rural market, which posted the highest growth in sales in the last fiscal.

MSI presently has the capacity to produce 6-lakh cars in Gurgaon, where older models like Maruti 800, Alto, WagonR are made, and 3-lakh cars at the Manesar plant where its globally strategic models Swift, SX4 and the A-Star are made.

"This investment is being made in addition to Rs 9,000 crore earmarked for 2008-11 to set up a new engine plant and a new research and development centre, touted as the largest facility outside Japan to develop new cars, and to expand the Manesar plant," said Shinzo Nakanishi.