Suzuki sees Toyota's Daihatsu buyout as serious threat | Reuters - Firstpost
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Suzuki sees Toyota's Daihatsu buyout as serious threat | Reuters

Updated: Feb 3, 2016 01:45 IST

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NEW DELHI Suzuki Motor Corp's (7269.T) position in India and other markets is under serious threat from Toyota's (7203.T) buyout of rival Daihatsu (7262.T), Suzuki's president said on Tuesday.

Toyota, the world's biggest carmaker, is to buy its remaining stake in Daihatsu as part of a strategy to strengthen its push into compact cars for emerging markets -- a move likely to increase competition for Suzuki in one of its biggest and fastest-growing markets.

Profit generation will become a more challenging proposition for Suzuki as multiple competitors seek to muscle in on the Indian market, Toshihiro Suzuki told reporters in New Delhi.

"It is not only the Toyota alliance, but the entry of other international (car) manufacturers in India which is making the competition tougher," the Suzuki president said in Japanese through an interpreter.

The company will need to build and sell cars that exceed buyers' expectations and will also need to enhance its sales and service network, Suzuki said, as it plans to launch 20 new models globally by 2020, 15 of which will be brought to India.

In the year to March 31 the company's Indian business Maruti Suzuki India (MRTI.NS) accounted for 41 percent of group sales. Maruti sold 1.2 million passenger vehicles in the period.

Maruti is India's top-selling carmaker, with nearly 50 percent of the passenger vehicle market, but it faces growing competition from the likes of Hyundai (005380.KS) and Honda (7267.T).

The business is rationalising its production process and in the next five years will reduce the number of platforms on which it builds cars in India to three or four, Maruti's head of engineering, C.V. Raman, told Reuters.

This will enable the carmaker to use the same components in multiple models to achieve economies of scale and allow it to reduce car weights to improve fuel efficiency, Raman said.

"It is one of the core engineering inputs ... to improve our competitiveness," Raman said, adding that parent company Suzuki will invest in developing the technology for the platform.

To reduce dependence on India, Suzuki said the Japanese carmaker needs to increase sales in Europe and Asia while improving profitability in those regions.

He said the company is not planning to form any kind of alliance with Toyota or any other carmaker but will instead work with component manufacturers and raw material suppliers to enhance safety and fuel-efficiency technology.

(Additional reporting by Naomi Tajitsu in Tokyo; Editing by David Goodman)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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