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Business News/ Companies / News/  Maruti Suzuki quits consortium to develop electric cars

Maruti Suzuki quits consortium to develop electric cars

Maruti Suzuki cites as reason 'personal plans' of parent Suzuki Motor, which recently announced a tie-up with Toyota to make cars safer and cleaner

Maruti Suzuki has commenced affordable hybridization with so-called SHVS technology in models such as the Ciaz (in photo) and Ertiga. Photo: ReutersPremium
Maruti Suzuki has commenced affordable hybridization with so-called SHVS technology in models such as the Ciaz (in photo) and Ertiga. Photo: Reuters

New Delhi: Maruti Suzuki India Ltd has decided to withdraw from an Indian consortium that was to develop and build six electric and hybrid vehicles, citing “personal plans" of its parent Suzuki Motor Corp., four people, including two with direct knowledge of the matter, said.

This means the so-called project xEV, which was supported by the government of India, is likely to be a non-starter even though some members of the consortium said the group will be reconstituted.

The move comes close on the heels of an announcement by Japanese carmakers Toyota Motor Corp. and Suzuki Motor that they are exploring some form of collaboration amid unprecedented costs to make cars safer and cleaner. The two companies have started examining opportunities to collaborate on research and development (R&D), they said in a joint statement on 13 October.

“During the initial discussions, Suzuki wanted a majority of research work to happen in Japan and other members of the consortium did not agree to it," said a person with direct knowledge of the matter. “Later, Suzuki cited their personal plans in this space, forcing Maruti to pull out of the consortium," the person said.

With around 40% of Suzuki’s consolidated profit coming from India, Maruti is a money mill for the Japanese company and holds a key position in the success matrix of its parent’s partnership with Toyota, Mint reported on 13 October.

ALSO READ | India holds the key to Suzuki-Toyota tie-up

A Maruti Suzuki executive, who spoke on condition of anonymity, said with changing requirements around safety and emission norms, the firm does not have enough engineering and research manpower to devote to Project xEV. “There is a lot of collaboration happening between India and Japan in areas such as hybrids, cleaner fuel, etc., and that leaves little room for us to invest in the consortium," the person said. However, he added that it remains unclear if people from Maruti will be involved in the Suzuki-Toyota partnership.

Significantly, Maruti’s top leadership, including R&D head C.V. Raman and executive director for sales and marketing R.S. Kalsi visited Japan last week. Mint couldn’t immediately ascertain what transpired during their visit.

Responding to a detailed questionnaire sent to the company on Saturday, a Maruti Suzuki spokesperson said that the company is leading affordable hybridization in the country and has introduced the so-called SHVS technology in models such as the Ciaz and Ertiga. Together, the hybrid variants of these models have sold over 90,000 units, the company spokesperson said.

“The company with support from parent Suzuki, Japan, will continue to think and work on measures to deepen hybridization in the country. The consortium is one possible step. This also has to be balanced with a steep demand on engineering resources the company is facing to meet the target of upgrading 50+ model variants from BS IV to BS VI in the next three years to meet the government deadline," the spokesperson added.

With Maruti opting out of the project, the consortium will now be reconstituted, said Arvind Mathew, the outgoing chief executive at Mahindra Reva Electric Vehicles. “We’ll now bring on board the component makers as the idea is also to build an ecosystem for such vehicles," Mathew said, declining to share details.

Mint on 15 June first reported that Maruti Suzuki India Ltd, Mahindra & Mahindra Ltd, Ford India Pvt. Ltd, Mahindra Reva Electric Vehicles Pvt. Ltd and Tata Motors Ltd had created a consortium that will help develop a supplier base for critical hybrid and electric vehicle components. The components were to feed into the efforts of members of the consortium to build six electric and hybrid vehicles. The first of the six vehicles was to hit the roads in two years from the start of the project. Ford pulled out of the project on 25 July.

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Published: 25 Oct 2016, 12:41 AM IST
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