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Suzuki President Toshihiro Suzuki says demand will recover in India shortly

Suzuki President's words hold much importance in the context of India, as automakers in the domestic market have been reeling under the worst slowdown in two decades. Suzuki owns 56.2% in the country’s largest car maker Maruti Suzuki.

, ET Bureau|
Updated: Oct 24, 2019, 08.07 AM IST
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Suzuki Motor Corporation (SMC) President Toshihiro Suzuki (File Pic)
TOKYO: Suzuki Motor Corp (SMC) president Toshihiro Suzuki said conditions were tough at present in the Indian market where its Maruti Suzuki unit is the leader, but expressed hope that these would change shortly.

“…hopefully (the market) will recover soon,” Suzuki said on the side-lines of the Tokyo Motor Show, while cautioning that it could also take some more time.

Suzuki’s comment comes at a time when passenger vehicle sales in the Indian market declined for the eleventh consecutive month in September — by 23% to 2,23,000 units — reflecting an economic slowdown and due to increased prices following implementation of enhanced safety and emission standards. The sluggish demand environment prompted Suzuki’s most profitable subsidiary, Maruti Suzuki, to slash vehicle production for eight months in a row.

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At Maruti Suzuki, sales crashed 27% to 6,63,522 units in the first six months of the fiscal year starting April.

Earlier this month, SMC, which owns a 56.2% stake in the Indian automaker, cut its earnings estimates for the current financial year on the back of production loss in Japan and slowing sales in India. Suzuki now expects sales to drop 10.3% to 3,500 billion yen.

It lowered the forecast on operating income by 39.4% to 200 billion yen and net profit by 30% to 140 billion yen.

Maruti Suzuki contributed nearly 54.5% to the parent company’s production and 36% to net sales in the last financial year.

Suzuki admitted it would be a challenge for Maruti Suzuki to maintain its 50% share in the Indian passenger vehicle market given increased competition and disruptions in the automotive space, but said efforts were being made to consolidate and strengthen its position. “Globally, one company cannot get a 50% share in one country. The Indian market is a very special place. I try to keep the 50% share, but (it is) very challenging … General Motors in USA holds 16.8% (and) Volkswagen in Europe (is in the) same situation. I would like to keep the 50% share,” he said.

SMC has in the past few years stepped up investments in India, and has set up a wholly-owned manufacturing facility (Suzuki Motor Gujarat) and a battery-making unit in collaboration with Toshiba-Denso to be future ready. The Japanese automaker has also formed an alliance with compatriot Toyota Motor Corp to develop among others eco-friendly vehicles for in India.

Suzuki has also internally developed an electric version of the WagonR small car, which is undergoing trials for introduction in India.

However, Suzuki said it would be tough for electric vehicles to take off in India due to inadequate infrastructure. “Hybrid is a good solution for the Indian market,” he added.

Maruti Suzuki offers hybrid vehicles in the Indian market, but demand for such models has been tepid due to high taxes on the technology. The Indian government has been urging automakers over the last couple of years to move to electric and alternative fuel vehicles to help curb pollution and oil imports.

(The correspondent is in Tokyo at the invitation of Toyota Motor)

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