Toyota, Suzuki Chiefs Meet Modi in India as VW Eyes Tata Tie-Up

  • Maruti Suzuki unit has 48% share of India’s auto market
  • India is Asia’s third-largest auto market after China, Japan

Toyota Motor Corp. and Suzuki Motor Corp. discussed their partnership and future technological developments with Indian Prime Minister Narendra Modi as the two Japanese carmakers accelerate their alliance talks.

The two companies will promote manufacturing in India, with the potential to export Indian-made new-technology vehicles, according to a statement on the Prime Minister’s official website describing the meeting with Toyota President Akio Toyoda and Suzuki Chairman Osamu Suzuki. Toyota and Suzuki said last month that they’re working toward an alliance in areas including technology and the mutual supply of products and components.

“The partnership is expected to bring together Toyota’s global leadership in technology and manufacturing, with Suzuki’s strength in manufacture of small cars, especially in India,” according to the statement. “It is expected to enable India to use new technological developments. Further, high volumes will enable local manufacture of components required for these technologies.”

India is encouraging investments under a “Make in India” program, which seeks to make it easier to do business and boost local manufacturing by overseas companies. Besides the two Japanese carmakers, Volkswagen AG is in advanced talks to team up with Tata Motors Ltd. as the German automaker takes another stab at India after an acrimonious break-up with Suzuki. France’s PSA Group also plans to start producing and selling vehicles in Asia’s third-biggest auto market.

A representative for Toyota confirmed the meeting but declined to provide further details. Hidehiro Hirano, a Suzuki spokesman, could not immediately be reached for comment.

Vehicle deliveries in India have risen 63 percent since 2009 to last year, putting the country behind China and Japan in terms of annual sales in Asia. Automakers see the potential in India, which like China has a population of more than 1 billion people but about a tenth of the latter’s annual auto sales.

For Toyota, which has a research and development budget that’s more than seven times that of Suzuki’s, a tie-up would allow it to tap on the leading position of Maruti Suzuki India Ltd. in the subcontinent. Though Toyota has introduced budget models such as the Etios compact, its market share remains well behind the 48 percent reached by Maruti Suzuki, which has dominated the market with inexpensive cars like the Alto and Swift.

The link-up adds to the multitude of alliances that Toyota has forged with Japanese car and truck makers. Entering a partnership with a larger automaker helps Suzuki share its development costs in the face of rising R&D spending in areas such as clean energy and autonomous driving, and increased scrutiny of the industry from regulators following a string of mileage and emissions scandals.

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