SUZUKI FAN

Suzuki and Volkswagen may make some solid global announcements in the next six-to-eight months

Suzuki Motor will not share its car platforms in India with Volkswagen, which holds a 20% stake in the Japanese carmaker, a senior official said on Wednesday.

“There is no possibility of platform sharing (with Volkswagen) as the German company’s production and product development costs are very high and that could make our business unviable,” Shinzo Nakanishi, MD and CEO of Maruti Suzuki India, told ET.

In fact, the association between the two carmakers may be limited to sharing production facilities for contract manufacturing.

“There is a possibility of an original equipment manufacturing deal with Volkswagen, like the way we have with Nissan which sells hatchback A-Star as the Pixo in Europe,” said Mr Nakanishi.

The move may upset Europe’s largest carmaker’s ambitious plans for India, one of the fastest-growing auto markets in the world.

When Volkswagen picked up a 19.9% stake in Suzuki Motor Corp for $2.5 billion last year, the two companies said they would explore possibilities of vehicle development and joint production.

After all, one clear reason for the deal was Suzuki’s strong presence in India, a crucial market if Volkswagen were to reach its goal of becoming the world’s largest carmaker.

Volkswagen has been looking at controlling costs by harnessing Suzuki’s production practices and generating volumes in the small car segment as global market shift towards compact cars.

Now, it may have to do it the harder way.

Mr Nakanishi said the European firm can learn a lesson or two in frugal manufacturing from Maruti. “Volkswagen’s cost of products is high whereas Maruti’s product management costs are very low; so they can learn from us,” he said.

But Maruti Suzuki does not want to tap Volkwagen India’s facilities to overcome its current capacity crunch. “They are too expensive,” said Mr Nakanishi.

He, however, said Suzuki and Volkswagen may make some solid global announcements in the next six-to-eight months. Some project may come out by the end of this year or early next year. “It takes time as both companies are very big, so to find synergy is not easy. They are doing some discussions,” Mr Nakanishi said.

Top Volkswagen executives had visited Maruti’s factories in Gurgaon in May this year and met its top brass to explore synergies. The companies are exploring synergies in areas such as product design — not necessarily joint development and sharing of models — and product testing, evaluation or part-designing of future models and special projects.

 While Suzuki is keen on getting Volkswagen’s technology, particularly smaller diesel engines, the German firm is interested in Maruti Suzuki’s expertise in high volume production at a very competitive cost and efficiency.

At the time of announcing the deal, analysts and auto experts had said that the German company will look to ride on Maruti’s formidable small car core competence in joint product development and purchasing synergies.

source: economictimes

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