NEW DELHI: Maruti Suzuki India Ltd and parent Suzuki Motor Corp. are scaling up their bets in the shared mobility industry by developing a multipronged strategy to exploit this rapidly growing market and offset a potential impact on sales of personal vehicles, said two people aware of the plans.

The companies plan to invest in startups in India to develop software solutions for the shared mobility industry comprising both cab aggregators and logistics players for commercial vehicles, said the people cited earlier, requesting anonymity.

Maruti Suzuki has set up a so-called mobility technology department that also works towards developing vehicle models aligned with the needs of cab aggregators, the people said. The department will be headed by Rachapudi Srihari, who was previously the national customer relationship manager at Maruti.

Meanwhile, in an effort seen as supporting Maruti’s venture, Suzuki has opened a new office in Bengaluru, where it has moved some of its employees from Silicon Valley in the US. These executives would also be working with various startups in the mobility space, said the first person cited earlier.

Auto makers globally are expanding their strategies as the fast expanding shared mobility market is expected to impact sales of personal vehicles in the years ahead. This is likely to happen especially in cities where road congestion, higher car prices and parking issues lead more people to choose shared mobility.

In India, auto makers are investing in cab aggregators such as Ola and Uber, while also developing vehicles that are more suited for such applications, including electric and hybrid vehicles.

In March, South Korea’s Hyundai Motor Group announced an investment of $300 million in India’s biggest cab aggregator, Ola. The deal involves band parking issues lead more people to choose shared mobility.

In India, auto makers are investing in cab aggregators such as Ola and Uber, while also developing vehicles that are more suited for such applications, including electric and hybrid vehicles.

In March, South Korea’s Hyundai Motor Group announced an investment of $300 million in India’s biggest cab aggregator, Ola. The deal involves both Hyundai Motor Co. and Kia Motors Corp. to work with the Bengaluru based startup for developing customized electric vehicles and charging stations appropriate for ride-hailing applications. This followed a 100 crore investment made by Hyundai last August in car-sharing platform Revv.

Mint reported on 17 October that Tata Motors Ltd had set up a separate division named Mobility Innovation Hub to explore ways to tap its entire range of passenger and commercial vehicles for offering shared mobility solutions.

The two people cited earlier said Maruti’s long-term objective was to offer “end-to-end solutions" in the shared mobility space. The company is the biggest supplier of vehicles to cab aggregators in India.

In the beginning, the new department would study various startups in terms of business potential while spearheading the company’s shared mobility activities, they said.

A spokesman for Maruti declined to comment to emailed queries sent on Wednesday.

“Maruti, like some of the other auto makers, has understood the importance of offering mobility solutions directly to the customers. In India, these concepts are at a very nascent stage, but one has to prepare for the future," said the first person cited earlier. “The other manufacturers have also been doing the same and Hyundai’s investment in Ola Cabs is an indication."

The steps by Maruti Suzuki in the shared mobility segment underscored the company’s ability to transform itself in line with changing market conditions, said Puneet Gupta, associate director-vehicle forecast (South Asia) at IHS Markit.

“Fifteen years back, Maruti Suzuki started with new initiatives like entry into used car business, insurance, fleet and accessories business. All of these have been game changers for Maruti Suzuki in the last decade and helped Maruti Suzuki not only maintain their leadership position, but also capture more than 50% market share today," Gupta said. “Similarly, we feel Maruti Suzuki’s entry and dedicated focus in areas like mobility, EV (electric vehicle) business would be game changers in the coming years."

The increasing popularity of shared mobility is likely to slow global vehicle sales as more people will likely choose shared mobility. However, car sales in developing countries are expected to outpace shared mobility’s impact over the next 15 years. Still, through 2030, roughly a third of the expected increase in vehicle sales from urbanization and macroeconomic growth will likely not happen because of shared mobility, according to a McKinsey report.

Auto makers globally are trying to participate in this dynamic market by investing in startups in the mobility ecosystem while supplying custom-made vehicles to these companies.

“Most manufacturers are looking at startups now, but there is risk association with this, since one has to bet on the right startups so that the investment or the association yields value. Hence, a separate division is needed for such projects. Hence Suzuki’s decision to station some of its people in Bengaluru also makes sense," said the second person cited earlier.

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