Home >Companies >Three cars, to be built from scratch, to test Maruti’s mettle

New Delhi: Japanese automaker Suzuki Motor Corp. (SMC) has asked its Indian unit to design and develop at least three car models from scratch, a top company executive said.

The move, which comes 33 years after Maruti Suzuki India Ltd rolled out India’s first people’s car, reflects the growing maturity of Indian auto development and engineering.

It is also prompted by Maruti’s growing sales in India and increasing variation in consumer behaviour, Kenichi Ayukawa, Maruti Suzuki’s managing director and chief executive, said.

“About model development itself, we will have to do it both at Maruti as well as SMC," Ayukawa said. “In the next immediate future, some two or three models will be taken by our engineers."

These products will be developed at the firm’s 2,500-crore research and development centre in Rohtak, Haryana, that will be ready in early 2017. Maruti claims this will be the best of its kind in Asia, with facilities for testing, evaluation of vehicle designs, crash-tests, and 34 different tracks including a high-speed circuit that’s 5.9km long.

Developing the cars will mark the coming of age of Maruti engineers, who have thus far played second fiddle to their Japanese counterparts.

SMC has led the design and development of all Maruti cars, starting with the 800 in 1983. Sure, troops of Indian engineers have been stationed at the Japanese firm’s research and development (R&D) centre during this.

Still, over the years, as Maruti became a Suzuki company and as the parent transferred proprietary technologies for critical parts, the engineering capabilities of Maruti Suzuki have evolved.

Maruti’s head of engineering C.V. Raman is the chief engineer for Maruti’s yet-to-be-introduced compact sports utility vehicle Vitara Brezza. But even in Vitara Brezza, the design is Suzuki-inspired, Raman admitted, while Indian engineers have worked on other aspects that follow the Suzuki global product development process.

“The direction is that experienced Indian engineers should make judgement. That is one of the steps of the maturing R&D (process). You need to go step by step. An engineer, unless he does (such) a project, will not be able to learn," Raman said.

The success of these models will be crucial for Suzuki as it is banking on its Indian operations to spread its presence globally.

Suzuki has projected its revenue to rise to 3.7 trillion yen (around 2 trillion) in the year ending 31 March 2020 from 3.01 trillion yen at the end of March 2015. Maruti accounted for 15.5% of SMC’s consolidated revenue in 2015. The Japanese company owns a 56.2% stake in Maruti Suzuki.

Suzuki plans to introduce 20 new models globally by 2020, of which 11 models will be in the small car segment and nine in the sedan and utility vehicle segment, as it seeks to shed the small-car-maker tag. At least 15 of the new cars are expected to be launched in India, where it aims to sell more than 2 million units (including exports) by 2020, up from 1.3 million units sold during the year ended 31 March 2015.

Once the Gujarat manufacturing facility being built by SMC becomes operational in 2017, Maruti has said it will look to increase exports to Africa, Asia, the Middle East and Latin America. The firm plans to export 20% of its overall production (including that produced by the Gujarat factory) in the medium term, Ayukawa said.

According to Abdul Majeed, partner and national auto practice leader at PricewaterhouseCoopers, the products developed out of India will be targeted at emerging markets and there cannot be any better place than India to develop those products.

“There will be a lot of similarity between a customer in India or any other country. It makes a lot more sense. There will be a lot more value-addition in the car. They are trying to capitalize on that," Majeed said.

SMC expects India to become the world’s third largest passenger vehicle market by 2020 with annual sales of five million units. This could further grow to eight million units annually by 2025, the company said. With sales of 2.6 million passenger vehicles in 2015, India is currently the world’s fifth largest automobile market.

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