New Delhi: Toyota Motor Corp. and Suzuki Motor Corp. on Thursday agreed to sell each other’s cars in India, where Suzuki outsells Toyota models 11-to-1, deepening the partnership between the two companies.
While Suzuki will supply its best-selling models such as compact car Baleno and small sports utility vehicle Vitara Brezza to Toyota, small car specialist Suzuki will source Toyota’s popular sedan Corolla and sell it through the dealership network of Maruti Suzuki India Ltd—its local unit.
“Details on each model, such as the schedule of the start of supply, number of supplied units, vehicle specifications, and supply pricing, will be considered at a later stage," the companies said in a joint statement, adding that the announcement is a part of “a basic agreement toward the mutual supply of hybrid and other vehicles between the two companies for the Indian market". The two carmakers first made an announcement on 6 February 2017, when they concluded a memorandum toward business partnership. The latest move follows a research and development alliance announced by the two companies a year ago.
The coming together of Toyota, the world’s largest automobile company, and Suzuki, which dominates the Indian market, underlines the importance of the local passenger vehicle market that is expected to triple to 9.4 million units by 2026 from 3.2 million now if the economy grows at an average rate of 5.8% a year, according to the government’s Auto Mission Plan 2016-26.
While the companies refrained from calling it “cross-badging" of their products, Maruti Suzuki chairman R.C. Bhargava said that Vitara Brezza and Baleno would be tweaked outwardly so that they do not look identical when Toyota sells them and a similar strategy would be adopted by Toyota for its Corolla sedan.
“In terms of functionality, though, the vehicles would not change at all," Bhargava said.
To be sure, cross-badging as a concept has not been successful in India when it was first tried by the Renault-Nissan alliance and later by Volkswagen and Skoda. Models such as Nissan Sunny and its twin Renault Scala, Nissan Micra and Renault Pulse and Volkswagen Vento and its twin Skoda Rapid failed to live up to customers’ expectations.
Deepesh Rathore, the London-based co-founder of Emerging Markets Automotive Advisors, said that Toyota would do well to improve interiors and some features such as navigation systems before selling Baleno and Brezza under its stable.