Maruti seen biggest gainer in Toyota-Suzuki mega deal

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Swaraj BaggonkarMoneycontrol

Japanese automakers Toyota and Suzuki, which started looking into a partnership in October last year, have decided to work together in areas of environmental, safety and information technologies, and mutual supply of products and components.

Suzuki Motor Corporation's India outfit Maruti Suzuki which has a 50 percent share in the domestic passenger vehicle market, will become the biggest beneficiary of this mega deal.

Maruti Suzuki, which contributes 65 percent of the consolidated profits of Suzuki, will benefit from Toyota’s advanced technologies in areas of alternate fuels like hybrids, fuel-cell, electric as well as autonomous driving.

These were also the critical technologies of the future where the Indian car market leader was struggling whereas rivals such as Renault, Nissan, Ford, Honda and Volkswagen have raced ahead of it long ago. India as well as other nations are moving to an increasingly challenging emission regulation environment in the next few years thus putting enormous pressure on automakers to focus on upgrades.

Globally, Suzuki is accused of not focusing enough on areas beyond small cars which has been its expertise for decades. Toyota has developed a range of pure hybrid and electric mobility solutions and is also rapidly developing driver-less car technology.

“The companies agreed today to begin concrete examinations toward the realization of business partnership in areas including environmental technologies, safety technologies, information technologies, and mutual supply of products and components. Toyota and Suzuki have agreed to work toward the early realisation of business partnership. To that end, the two companies are to immediately establish an implementation framework aimed at bringing to realisation the points agreed on today,” said a statement from Toyota Motor Corporation, the world’s second biggest car maker.

The next step would be to come up with specific cooperation projects, both sides said.

Suzuki's emphasis on moving new product projects to India from Japan to accurately understand consumer needs while remaining cost-efficient has paid it rich dividends in the long run. Toyota has been cautious on its investments in India, leading to a weak pace of product rollout in tune with changing consumer preference. Toyota is absent from several of the key volume-generating segments such as super compact hatchback, super compact SUV, compact sedan and compact SUV.

“Hybridisation and electrification is the way forward and if Suzuki does not start work on it now, we will be wiped out. Tomorrow, if somebody puts a car in the market which is 30 percent more fuel-efficient than normal, we will find ourselves in trouble. Suzuki is trying to find how to protect itself against that kind of risk in the future,” said senior Maruti Suzuki official.

Toyota on the other hand has a chequered past in India. The auto is into its 20th year in India but is yet to set up an independent R&D centre like Suzuki, Hyundai and Renault have done here. Even product it had developed keeping India as the lead market, such as the Etios and Etios Liva, were developed in Japan. Both the Etios and Liva have failed to generate much demand.

Compared to Suzuki, Toyota has been cautious on its investments in India, leading to a weak pace of product rollout in tune with changing consumer preference. Toyota is absent from several of the key volume-generating segments such as super compact hatchback, super compact SUV, compact sedan and compact SUV. Toyota has decided to bring Daihatsu to India to compete in the cost-efficient small car segment which could become simpler with the help of Suzuki.