Suzuki Motor Corp and Toyota Motor Corp have reached an agreement which will see the two companies manufacture vehicles for one another in India. This is part of Toyota’s strategy of increasing market share in the fifth-biggest passenger vehicle market in the world. The deal comes after a research and development tie-up that was disclosed last year by the two Japanese vehicle manufacturers. While Toyota is more dominant globally compared to Suzuki, the latter has made a name for itself in India by producing affordable compact cars.
Per the deal Suzuki will supply both the gasoline as well as the mild-gasoline hybrid Baleno hatchback and Vitara Brezza, a compact sports utility vehicle to Toyota. The leading car manufacturer in Asia will on the other hand manufacture for Suzuki gasoline as well as gasoline-hybrid Toyota Corolla sedans.
According to analysts the agreement will assist Toyota in expanding its brand presence in the fifth-largest passenger vehicle market in India. The automaker has been struggling to grow its sales as demand for its low-priced models is lean.
“India is a big blemish on Toyota’s otherwise strong track record for breaking into emerging markets. By selling rebadged and slightly changed Balenos and Vitaras, Toyota can bolster its distribution network and move more towards expanding its market share,” Macquarie Securities’ Asia transportation research head, Janet Lewis, said.
Manufacturing is expected to start mid next year and the agreement stipulates that cars manufactured by Toyota will carry the Suzuki badge while those produced by Suzuki will bear the Toyota name. Though Toyota did not disclose production figures Japanese media revealed that the number of cars that Toyota would produce for Suzuki would be about 10,000 while the number of cars that Suzuki would make for Toyota would be 50,000.
The deepening of the partnership between Toyota and Suzuki will enable the latter to tap into the R&D firepower of the former in order to develop driverless cars and lower-emission vehicles. Suzuki has already admitted that it is lagging behind in these areas. The two Japanese automakers have already made plans to introduce electric vehicles in the second most populous country in the world in 2020.
The dominance of Suzuki in the automobile market of India has been achieved via the majority stake the Japanese firm holds in the country’s biggest car manufacturer, Maruti Suzuki India. In 2017 Maruti Suzuki India sold approximately 1.6 million cars which was about 50% of all the cars sold in the country. During the same period the number of cars Toyota sold in India was 140,000.