Suzuki looks to maintain 50% India market share ‘for eternity’

Suzuki looks to maintain 50% India market share ‘for eternity’

Tokyo: The head of Japan’s Suzuki Motor Corp. said on Wednesday that the auto maker would beef up its vehicle line-up and dealer network in India, in a bid to keep a market share of at least 50% “for eternity".

“We can’t let newcomers break our 50% share that easily. We’re going to do everything we can to keep that level for eternity," chief executive Osamu Suzuki said.

Suzuki, Japan’s top maker of compact cars, has been expanding its sales and profits at breakneck speed in the past few years, largely thanks to its dominance of the fast growing Indian market. Suzuki, which owns a majority stake in Maruti Suzuki India Ltd, sold more cars in India than in Japan, for the first time in the first half of this fiscal year.

Suzuki, who was the main force behind the auto maker’s entry into India when the country was still an automotive backwater, has repeatedly acknowledged that competition was set to intensify as global heavyweights such as Toyota Motor Corp. and Nissan Motor Co. prepare to attack the market.

But, with a sharp focus on product development that includes bigger and more value-added cars such as the Swift hatchback and SX4 crossover, he said Maruti Suzuki was well placed to stay dominant.

Maruti Suzuki, founded by Suzuki and the Indian government in 1982, retains a firm grip on the local car market, increasing its sales by 24% last month. Third-ranked Tata Motors Ltd, its closest local rival, reported a 4% drop. South Korea’s Hyundai Motor Co. is the second biggest seller in India.

Shinzo Nakanishi, soon to be Maruti Suzuki’s managing director, said the company would likely boost its sales outlets to about 1,000 in the next 5-10 years, from about 550 now.

“I believe our rivals Tata and Hyundai Motor now have about 200 outlets, and they will similarly expand their networks," said Nakanishi, who, on 18 December, will become the first Japanese national to head Maruti. He added that investing in warehouses to store spare parts in various regions of the country was also in the works.

In addition to future competition from global brands, Maruti Suzuki faces a potentially stronger rival in Tata or Mahindra and Mahindra Ltd, which are bidding for Ford Motor Co.’s British brands, Jaguar and Land Rover. Ford has said a decision would come by the end of the year.

The CEO of Suzuki put on a brave face, saying he was “grateful" for the fierce competition, and repeated that Maruti Suzuki will continue to stick to its own growth plans, unswayed by Tata’s separate plan for a $2,500 (about Rs1 lakh) “people’s car" for India.

In October, Maruti unveiled plans to invest 200 billion yen (Rs7,162 crore) in marketing, and research and development—including a new R&D centre with a test track and facilities rivalling its Japanese site. By the year ending in March 2011, Maruti will have a production capacity of one million cars a year.

Toyota, the world’s biggest auto maker, by comparison, has a local factory with capacity of just 60,000 vehicles a year. Nissan has no local factory yet, but plans to build cars and light commercial vehicles with part-owner Renault SA and local partners Mahindra and Ashok Leyland Ltd.

Who next?

Suzuki, who at the age of 77, has headed the company founded by his wife’s grandfather for 29 years, was characteristically elusive about any succession plans.

“Our board of directors also includes a president and seven senior managing directors. There will be plenty of competition for the top job, so you can rest easy," he said.

Asked whether Suzuki would be able to remain an independent car maker as the race to develop greener and safer vehicles intensifies, Suzuki joked: “I can’t predict the future, but if you’re talking about 10 years from now, I’ll be here, so we’ll be fine."

Suzuki cooperates with former top shareholder General Motors Corp. in the field of hybrid and fuel-cell technology, while it co-develops 1.3-litre diesel engines with Italy’s Fiat SpA.