Toyota and Suzuki have taken the next big step in forging their India partnership which could eventually lead to a deeper alliance in the coming years.

On Thursday, the two companies issued a statement where they referred to a ‘mutual supply of hybrid and other vehicles’ for the Indian market. This will see Suzuki supply its Baleno and Vitara Brezza to Toyota which, in turn, will supply the Corolla to its Japanese ally.

The vehicles will clearly be badged differently and sold in their individual dealerships. The idea is to ‘challenge and compete’ with each other with the ‘goal of mutual improvement’. The two companies have already announced their intent to enter India’s electric mobility space in 2020.

Clearly, this is a remarkable pace of progress for Toyota and Suzuki since early 2017 when they decided to work together in specific technology areas. It is now evident that India will be the core focus of their alliance. It is here that Suzuki rules the roost with a 50 per cent market share while Toyota is way behind with a single digit share.

Yet, the fact remains that Suzuki is strong only in India with traditional markets in ASEAN and Japan now seeing slower growth. Toyota, on the other hand, is a formidable global brand which has not been able to crack the Indian market even after 20 years.

Suzuki realises that it needs a strong ally to keep going, which explains why it had tried and tested alliances with General Motors and Volkswagen in the past. Neither worked according to plan and with Toyota, it is assured of greater cultural compatibility as well as access to top-class technology.

In its turn, Toyota has realised that the world of mobility is changing across the world with new challenges like electrification and connected cars. It has also decided to leverage critical alliances with fellow Japanese automakers to grow its global business. Hence, Toyota has teamed up with Mazda for the North American market where the focus will be on the electrification side. In the ASEAN region, its subsidiary, Daihatsu, will be a key component of the growth plan which will focus on Indonesia, Thailand, Vietnam and the Philippines.

For India, it has found the best partner in Suzuki which has been around for 35 years and has grown from strength to strength. Going forward, India will also cater to other markets in Latin America and Africa where Suzuki’s competencies in costing and compact cars will be relevant.

It will be interesting to see if equity will be the next part of the alliance with Toyota. Perhaps, Suzuki will eventually become part of its bigger and stronger partner’s fold though this is still some years away.

For now, this is a win-win alliance especially in the context of China’s emergence as a global automotive leader and Japan’s endeavour to remain in the reckoning.

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