Posted by: John Elliott | December 11, 2007

An Indian Suzuki car will sell in Europe – but not Japan

India’s auto industry has been gaining favor internationally as a source of components, but no-one has showed as much faith in its completed cars as the Suzuki Motor Corporation, which announced today that India will be the only production centre for its planned small “world car”, currently called the A-Star. Production will start at the company’s Manesar plant near Delhi next October and build up to 150,000 a year – 100,000 for export to Europe and 50,000 for India. A slightly modified model will be marketed in Europe by Nissan under a supply-contract between the two companies.

The A-Star will be unveiled at India’s motor show in Delhi next month. It is to be a five-door hatchback and sales will be spread beyond Europe after the launch. A new one litre aluminium engine and manual transmission will be produced in India by Maruti Suzuki and Suzuki Powertrain, a Suzuki subsidiary.

Osamu Suzuki, the company’s 77-year old chairman, would not put a price on the vehicle when he announced it in Delhi yesterday, nor comment on whether the company might produce what is euphemistically called the “one lakh car” planned by Renault and by India’s Tata Motors – the more likely price is around $3,000 or 1.2 lakhs of rupees (Rs120,000) according to Carlos Ghosn, CEO of Renault, who is talking to India’s Bajaj Auto about co-production.

Suzuki visibly brightened up when I asked him about this car. With eyes twinkling, he queried what sort of car it would be. He didn’t quite go so far as to doubt whether if it would have an engine or wheels, but he did say that ”we don’t know about safety and Co2 norms, nor production norms”. Having just explained that the A-Star would have “world-class environmental compatibility and comfort” with emissions “lower than European competitors” he asked “does it have an air bag or not” – knowing presumably that the answer is probably no. Teasingly, he added: “We don’t even know if $3,000 is the parts’ cost or the retail cost”, so it was “difficult to respond” whether he could produce it or not.

The significance of these remarks is that he does not seem to be worried about the “one-lakh” car eating into the 54% market share enjoyed by Maruti Suzuki, the Indian company that started out 24 years ago as a joint venture with the Indian government and is now 54% Suzuki owned. Maruti was a trailblazer when it began because there were no adequate component suppliers, and the country’s potential manufacturing strengths that had been suffocated by government controls. That has now all changed and auto component and vehicle manufacturers are now leading Indian manufacturing industry in terms of quality and, as I said, world acclaim. Suzuki plans $1.8 billion investment in the country between now and 2009

But Suzuki was shy about why he has no current plans to sell the A-Star in Japan. On that he would only say: “Suzuki already has a mini car on sale in Japan so it is not required”. Surely he can’t be avoiding sullying his Japan sales with a “made in India label?


Responses

  1. the way this article was presented it looks more like an ad for Suzuki than an objective reporting.

    If one is simply going to repeat what one of the competitors have said without adding waht the other fellow competitor feedback to the same is then that is not reporting but it is called slanted reporting which was surely the case in this instance

  2. Crash Test Dummy
    ————————————————-
    Mr Osama Suzuki seems like a middle tier / new world Savant.
    His scorn seems distinctly self-doubt rhetoric.
    The competition that he faces from TATA in India is healthy business rivalry, not
    kamakazi politics. He shouldnt forget that Japan faced the same disdain but a few decades ago when humbly entering the US market.
    The “J” factor but a few decades ago could very easily be misconstrued as “Junk” when the first few low segment
    cars were introduced in the US. In time , with refinement Suzuki too blossomed. Tatas are way ahead of that game
    and are as serious as your intent for quality. Thrash talking can be a two way street or DO ITTA (Move out of the way).

  3. John’s bias against India is so evident in the last line that it needs to be condemned and raises questions about the objectivity of his reporting. Will John enlighten us if American made cars sell in Japan?

  4. I think Fortune should review their Writers mental blocks towards INDIA and other Developing Countries to help prepare a Honest Editorial.

    Otherwise Biased Reports like this will keep coming out which will resist lot of people to visit these sites

  5. Although this car (and such others built by other indian auto companies) are not fit to be sold in advanced markets like US, it certainly has a HUGE market around the world – Latin America, African continent, Middle East, most of Europe and Asia. Techincally, the market is everything except the West and G8 countries. The good thing is, India is taking a lead in this high-tech sector where China is almost missing (or maybe lagging). China will eventually begin competing with India in automotive sector, but there’s still some time for that. Until then India should improve on its lead.

  6. Sanjay Gandhi, the son of India’s Prime Minister Indira Gandhi, said in 1970 that he would build a Rs 2500 car($250). The result was the Maruti, which costed much more(maybe 1-2 lakh rupees). The car grew popular because all competition from the Detroit big 3, Japanese automakers and local competitors was stifled by the then Nehru dynasty(Indira Gandhi, Sanjay Gandhi and Rajiv Gandhi). The local competitors,like the Birla’s lacked innovativeness and built toon-town Ambassadors for decades,based on 1950s British technology. The Indian Fiat, another popular car, was similarly a 1950s Italian Fiat.

    In the 1990s, stylish Korean cars and a few Mercedes(assembled in India) began to appear on India’s roads. Now there are many more models.

    India’s Tata’s are reportedly unhappy that their bid for the Jaguar was rejected.

    In fact, I don’t know an Indian in America who owns a Jaguar. It is lacking in quality and very pricey. I would not buy it even if it was Made in India.

    American cars are costly and crummy in quality.In my opinion, India’s manufacturers should try to meet and surpass the quality,cost and fuel efficiency standards established by Toyota,Lexus and Honda. That may happen years from now.

  7. Surely the last line of this article was not needed. The Indian auto manufacturing is pretty robust. Its time for the Fortune columnists to change their mindset and stop sounding like losers if not closet racists.


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