Gujarat to pave way for Suzuki’s global plans

In November 2013, Suzuki Motor Corporation had an investor conference which coincided with the Tokyo Motor Show. At that time, the company had reiterated that India would be a key pillar for its growth strategy along with Indonesia and Thailand.

On Wednesday, Osamu Suzuki, Chairman, and his colleagues from Japan and India were present for the foundation laying ceremony for the company’s new plant in Gujarat. To be commissioned in phases, it will be a critical gateway to markets in Africa and Latin America. The Gujarat site’s access to ports in Mundra and Kandla will facilitate car shipments quite unlike the present facilities in Haryana.

Big picture Suzuki had outlined its global vision at the November investor meet where India would be the headquarters for its plans to service the Middle-East and Africa. New car models would also be shipped out to Latin America from India, Indonesia, Thailand and Hungary. Ironically, the company had indicated then that it was proceeding cautiously on its Gujarat plan given market conditions prevailing at that time.

This was the period when UPA-2 was in the last lap of its regime and car sales were sputtering in a slowdown-hit scenario.

A lot has changed since then with a new Government in place headed by PM Narendra Modi who as Chief Minister of Gujarat had pulled out all stops to make it an auto hub. And even while the market is not completely out of the wood yet, Suzuki has hit paydirt with offerings like the Celerio and new Alto both of which have AMT (automated manual transmission) options. This year will be packed too with a host of new models and variants scheduled to hit the roads.

Gujarat will, however, give the company access to a larger global stage even as it strengthens its leadership position in India. This will be accompanied by greater focus on local R&D where cars made here will be shipped out elsewhere. For the five-year period ending 2017, the company had indicated in its November presentation that it would launch 16 models in Japan with India following with 14. The country has been referred to as the ‘most critical region to Suzuki and we will vigorously launch small cars and new genre of cars such as SUVs’.

The ASEAN region will see nine models launched with China (along with Europe) right at the end with seven despite its standing as the world’s largest car market. This is understandable since Suzuki’s strength lies in small cars, something which works well in most parts of Asia-Pacific while China has moved on to larger models. The local version of the Ciaz, Alivio, was launched there a month ago.

Expansion plans While endeavouring to develop more efficient products, Suzuki also plans to work on its automobile platforms. The three new lightweight platforms (mini vehicle, A and B segments) will be consolidated from which new models will roll out. This will ensure versatility in vehicles while keeping costs under check and reduce product development cycles. The company will also look at new engines where the focus will be on 660cc, 1000cc, 1200cc and 1400cc options. The new 660cc engine has been installed on mass-produced cars (including the mini truck).

From Suzuki’s point of view, India clearly is its most important market both in sales and profits. What started as a small operation with the Maruti 800 in 1983 has since grown to be the largest auto manufacturing powerhouse in the country with annual production comfortably exceeding one million units. This could double by 2020 when the Gujarat plant reaches full capacity and is firing on all cylinders.

The other reason for the India focus stems from the fact that Suzuki does not have the scale of other carmakers like Toyota, Volkswagen, General Motors and Ford. This is why it has wisely decided to confine its global play to ASEAN and India. Going forward, it makes sense to leverage these regions to cater to Africa and Latin America.

Perhaps realising this limitation, Suzuki had in the past forged an alliance with General Motors which was expected to play a big role in this part of the world. When they parted ways, Suzuki tied up with Volkswagen but that did not work either with the divorce now awaiting legal intervention. Observers believe Fiat will be a perfect ally for Asia-Pacific but for the moment, the Japanese carmaker would rather focus on the global potential India has to offer.

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