Suzuki, Toyota may decide on tie-up by end of 2018-19
The Suzuki-Toyota tie-up in India relates specifically to exchanging, rebadging and selling each others’ cars in the country
Mumbai: Japanese auto makers Suzuki Motor Corp. and Toyota Motor Corp. are likely to firm up discussions regarding their partnerships by the end of this fiscal, a top executive at Toyota Kirloskar Motor Pvt. Ltd said.
The partnerships relate specifically to exchanging, rebadging and selling each other’s models.
“The tail end of fiscal 2019 should see something (concrete) happening”, said Shekar Viswanathan, vice-chairman and whole-time director at Toyota Kirloskar Motor, a joint venture of Toyota and the Kirloskar group. A more definite timeline of events will also emerge towards the end of the year, he said in an interview.
On 29 March, Toyota and Suzuki agreed to sell each other’s cars in India’s growing automobile market, strengthening a tie-up formed on 6 February 2017 to undertake mutual supply of products and components, and jointly develop environment-friendly vehicles.
Under the agreement, small car specialist Suzuki will supply two of its best-selling models to Toyota; the compact car Baleno and sub-four metre sports utility vehicle (SUV) Vitara Brezza, while Toyota will deliver its popular sedan Corolla to be sold through the dealership network of Maruti Suzuki India Ltd, Suzuki’s local unit and India’s largest carmaker.
Viswanathan describes the model sharing agreement as a “win-win for both sides and the customer” as it would help the maker of Innova increase off-take via greater utilization of idle capacity at its two plants in Bengaluru. While the first plant has been running at full capacity for the past few years, the second is languishing at about 30% capacity utilization, according to Viswanathan.
The firms will also benefit from lower costs of development and distribution of a given model owing to the agreement, he said. “There will be more avenues of sales. Spare parts and service will also be made available through a much larger, more uniform network”, Viswanathan said, adding the firm will still have to compete with Maruti and others in the “crowded” A and B segments.
The A segment comprises entry-level cars shorter than 3.6 metres, whereas the B segment includes compact cars under four metres.
Toyota and Suzuki also agreed late last year to consider a joint structure for the introduction of electric cars in India in 2020, wherein Suzuki would undertake the manufacturing, and supply some units to Toyota with technical support from the latter.
On the question of Toyota’s individual India business, Viswanathan admitted to having “enough white spaces and gaps” in the product portfolio. However, the Bengaluru-based automaker would like to continue addressing “opportunities at the premium end”, which he defines as the C segment and above. He admits this portion of the market will not drive volumes, owing to the relatively higher price point, further disadvantaged by the “tax crutch” enjoyed by sub-four metre models as compared to bigger vehicles under the goods and services tax (GST) regime.