Why Osamu Suzuki’s exit as CEO matters to India3 min read . Updated: 09 Jun 2016, 03:15 AM IST
Toshihiro Suzuki will likely take the helm from his father Osamu Suzuki, but it remains to be seen how he handles Maruti Suzuki in Indiathe only bright spot in the car maker's global business
New Delhi: Suzuki Motor Corp.’s chairman Osamu Suzuki said he will relinquish the chief executive officer’s (CEO) role, a position he held for almost four decades, after the world’s largest small car maker admitted to fudging mileage data in Japan.
One of his top deputies, executive vice-president Osamu Honda, responsible for Suzuki’s research and development, will also retire amid the row that covers more than two million cars in its home base.
The changes will be subject to shareholders’ approval at the company’s annual meeting on 29 June, Suzuki said in a statement on Wednesday. Suzuki, who will retain the chairman’s position, said he held himself accountable for the scandal. He will also keep his position as board member of Suzuki’s India unit and will likely play an influencing role in the company.
“To me, it looked like a public relations exercise. Their image was taking a beating," said Deepesh Rathore, London-based co-founder of auto consultancy Emerging Markets Automotive Advisors. “There is not going to be any change in the structure. Osamu pretty much stays where he is."
However, the move may well accelerate the succession process that began in June 2015 at the company when the 86-year-old business tycoon named his son Toshihiro Suzuki as president and chief operating officer.
“The transition had to happen anyway. The question was about when. It could not have been delayed any longer," R.C. Bhargava, chairman of Maruti Suzuki India Ltd, said in a phone interview from London. Maruti is Suzuki’s India unit.
Under his father’s shadow, Toshihiro’s actions and deeds have largely gone unnoticed but if indeed he does don the CEO’s mantle, Toshihiro will be called upon to carry forward certain unfinished businesses which his father had initiated.
Osamu Suzuki was born Osamu Matsuda and joined Suzuki in 1958 after marrying into the family that ran it. During his nearly four decades at the helm, Suzuki turned the loom maker founded by his wife’s grandfather into one of the world’s biggest automobile makers, blazing a trail in the Indian market in the early 1980s.
In India, he literally drove the nation’s small car dream. Thirty years later, India has emerged as the only shining spot in Suzuki Motor’s global business, especially after it was forced to pull out of the US and significantly prune its European operations. The slowdown in the Japanese market has meant that it faces intense competition from the now-rejuvenated Daihatsu Motor Co., which has been bought by Toyota Motor Corp. Daihatsu is a formidable rival in Japan and some Southeast Asian nations. Daihatsu plans to enter the Indian market in the next three to four years, Mint reported on 6 April.
In response, Suzuki Motor has increased its bet on India and made Maruti in charge of expanding operations in Africa, a market it says is similar to what India was 30 years ago.
In Gujarat, Suzuki Motor is building a manufacturing facility that will cater to the export markets beside meeting Indian demand.
Maruti Suzuki sells 1.3 million units annually and aims to sell 2 million units per annum by 2020. At 47%, Maruti’s market share is at its highest since 2000. Last year, it surpassed its parent in terms of market capitalization and sales and exported a made-in-India car to Japan for the first time.
“I think Toshihiro starts at an advantageous position," Rathore said. “Suzuki Motor has a very well defined path. It does not have any ambiguity in terms of where it wants to be in the market. It has a very well-defined business plan as well as vehicle programme."
“It is like building on a very good foundation," he added.
Toshihiro’s involvement in India has been limited, although he is on the board of Maruti and part of its remuneration committee. He has also been a regular presence at the bi-annual Delhi Auto Expo.
A day before the 2016 Delhi Auto Expo, he held his first independent press conference with local media. A large part of his talk revolved around tackling competition from Daihatsu.
“SMC and Maruti Suzuki India Ltd will get united as one body and work on it," he said.
But like any new leader, Toshihiro will be compared with his father.
“That always happens. When some charismatic leader leaves any job. There was so much written about ‘after Nehru, who’?" Bhargava of Maruti said.
“Life carries on," he added.