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India vital for partnership

Toyota

  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

More than half of Suzuki Motor Corporation's profits and sales last year were driven by its India subsidiary, Maruti Suzuki, which controls nearly 50 per cent of the local car market.

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.

Maruti Suzuki has an engineer strength of a little more than 1,400 at its fledging research and development centre in the north. This R&D unit has launched 36 new or refreshed products, including the A-Star and Vitara Brezza, in the country in six years. The company recently set up a Rs 2,000-crore R&D centre in Rohtak, Haryana.

In comparison Toyota, the world's biggest car maker, which will complete 20 years in India next year, is yet to set up an independent R&D centre as Suzuki, Hyundai and Renault have done here. Even products 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.

Suzuki is also feeling the need to move to more expensive technology such as hybrids, fuel-cell and electrics, as well as driverless cars, all of which are at present alien to the company, said a senior executive from Maruti Suzuki.

Hybirds, electric and driverless cars are not Suzuki's strengths; Toyota is famous for these. These are very expensive R&D programmes. “Suzuki has always looked for technology partnerships, which is why they spoke to VW earlier,” said the executive.  

Toyota was the first company to launch the Prius, a fully hybrid model, on a global scale. The Japanese company has one of the largest offerings of hybrid cars in the world. It has showcased capabilities to make electric cars and autonomously driven vehicles.

What Suzuki brings to the table is small car design and manufacturing expertise. It has successfully demonstrated how to grow the small car business, despite the challenge of cost and affordability. Suzuki is not known for major breakthroughs in technology.

“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 per cent 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,” added the Maruti Suzuki official.  Toyota has actively contemplated bringing Daihatsu to India, a step-down brand in terms of cost. It is also aware of the risk in introducing a new brand to the Indian market.

Nissan revived a dead brand, Datsun, for the Indian market but it has so far garnered lukewarm response from customers.

“It is logical for original equipment makers to have alliances, so that each one can leverage on the other as far as their strength is concerned in different areas.

As long as the alliance partners are clear on what they will benefit from in terms of product development and deep market understanding, both will benefit and the customer also will benefit in terms of better product and services”, said Abdul Majeed, partner, Price Waterhouse.