New Delhi: Suzuki Motor Corp. is likely to supply as many as 25,000 Maruti Suzuki Baleno premium hatchbacks each year to Toyota Motor Corp. as the car gets set to become the first cross-badged product of the auto makers, said two people with direct knowledge of the matter. Toyota will start hawking the Baleno through its own dealership network from the first quarter of next fiscal year, the people who didn’t want to be named said.

To start with, Suzuki will supply 20,000 to 25,000 Baleno cars each year to Toyota’s local unit, the people said. The vehicle, which is currently produced at Suzuki’s factory in Gujarat, will undergo some minor changes in its exteriors and interiors such as head lamps, tail lamps and front grill, they said.

“The decision has already been taken by both the headquarters in Japan and the first vehicle to be launched will be Baleno," said the first person cited above. “The changes to be made have already been approved as well and both the companies have already decided on the number of vehicles to be supplied."

Spokespeople for the local units of Suzuki and Toyota—Maruti Suzuki India Ltd and Toyota Kirloskar Motor Pvt. Ltd—declined to comment.

Since its launch in 2015, the Baleno has turned to be a chartbuster Maruti Suzuki product with average monthly sales of 15,000 cars.

The sourcing of the Baleno follows a pact between Toyota and Suzuki in March this year for the two Japanese companies to sell each other’s vehicles in India. Suzuki will later also supply its compact sport-utility vehicle Vitara Brezza to Toyota. In return, Suzuki would source Toyota’s Corolla sedan and sell it through Maruti’s dealer network.

Suzuki and Toyota will have a task on their hands as cross-badging as a concept in India hasn’t set the sales charts on fire.

The Renault-Nissan Alliance, and Volkswagen and Skoda, tried a similar strategy with models such as Renault Duster and Nissan Terrano SUVs, and Volkswagen Vento and Skoda Rapid sedans among others.

For Toyota, the Baleno will give it a deeper presence in India’s high-volume but most-competitive hatchback segment. It will also be able to make use of spare capacity at its plant in Karnataka in the near future once Suzuki starts making the Baleno there. Toyota currently makes the Etios Liva hatchback in India.

“Toyota anyways doesn’t have any major investment plans in India until 2020 and Baleno is a product which is being exported to other countries including Japan hence there will be no issue regarding quality," the second person said.

Puneet Gupta, associate director at IHS Markit said choosing Baleno makes sense for both the companies, especially Toyota, which would need a smaller gasoline engine car to meet new corporate average fuel efficiency norms.

“Baleno is a well-accepted product in India now and it is expected that adding a product like that will help Toyota in getting volumes in a segment where they are not present," Gupta said.

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