New Delhi: Suzuki Motor Corp. may soon allow Maruti Suzuki India Ltd to sell cars in overseas markets under the latter’s badge, turning it into a global brand of the Japanese auto maker.
The cars exported to the new markets being explored by Maruti at the moment are likely to be branded Maruti Suzuki. The Japanese company has a 56.2% stake in the Indian car maker and the latter contributes 40% of Suzuki’s global revenue by selling more than one million units every year.
“At the moment, we do not have any plans to do assembly operations in foreign countries. But in the newer markets that we are looking to tap, Suzuki will not have a problem promoting the Maruti brand,” said R.C. Bhargava, chairman of Maruti Suzuki. “Eventually, cars will be sold under Maruti Suzuki brand name.”
The current exports from India are sold under the Suzuki brand name. The change will mark the entry of Maruti Suzuki into global markets, 30 years after it was formed as a joint venture between the Indian government and the Japanese firm.
To be sure, the then Maruti Udyog Ltd used to sell cars such as the M800, Omni and Esteem under the Maruti brand name; later, Suzuki was added as a suffix when the Japanese firm bought a majority stake in it in 2001.
Suzuki had considered a separate brand seven-eight years ago, but went against it due to a smaller product portfolio and possible competition between its own dealers, according to Shinzo Nakanishi, managing director and chief executive Maruti Suzuki.
“So this thought has crossed our minds some seven-eight years ago. But now that we have a bigger portfolio of cars, we may have to think in that direction but not now,” Nakanishi said in an interview.
Globally, car makers follow a strategy of aiming different brands at different sets of customers. For example, German Volkswagen AG has Skoda as its low-cost brand for developing markets, while it also has Audi, which targets the premium segment of the market. Similarly, Renault SA has Dacia while other Japanese firms such as Toyota Motor Corp. and Nissan Motor Co. have Daihatsu and Datsun as low-cost offerings, respectively.
“Having sub-brands allows the companies to save cost. The firm may do badge engineering, which means to sell one car under two brand names,” an industry executive said, requesting anonymity. “One can save cost by sharing platforms, components and other specs. At the same time, it does not let the equity of the parent brand to get diluted.”
According to another company official, the idea is to let the Indian subsidiary grow as a low-cost brand in markets such as Africa.
“Because, today the African market is where India was around 20 years ago,” the executive said on condition of anonymity. “So Suzuki wants to project Maruti as an affordable car brand in such markets.”
However, Suzuki did not have this kind of confidence in the Indian operations about five years ago, the official said.
“But the experience of the global meltdown of 2008 has changed this perception,” the executive said.
Maruti Suzuki not only survived the crisis, but contributed to the parent’s growth, making “the Japanese believe they need to strengthen Indian operations and prepare it as an alternative to its Japanese operations”, he said.