It will pave the way for the introduction of cutting edge products and technologies in India. It's Suzuki's third major partnership after its limited success in tie-ups with General Motors of US and Volkswagen AG of Germany. Both the collaborations lasted few years, but this the alliance could steer the Japanese companies to greater heights. Suzuki has been trying hard to venture into new areas of powertrain, beyond its hardcore petrol with mixed results.
Its only success in diesel has been the multi-jet engine, sourced from Fiat. Suzuki's own proprietary technology in diesel, DDiS 125 engine, despite its staggering 27.62 kmpl mileage in Celerio hatchback has been almost phased out following a lukewarm response from the customers. The new partnership for both complement each others' thrust on new technologies from the futuristic world of hybrid, electric, fuel cell, bio-fuels and self driving cars that could drive next generation of passenger vehicles. Toyota President Akio Toyoda and Suzuki Chairman Osamu Suzuki announced the partnership without divulging any details or the scope of partnership, "Aim to jointly contribute to resolution of social issues and achievement of sound and sustainable development of an automobile-based society," read the statement.
Akito Tachibana, MD at the Indian subsidiary, Toyota Kirloskar Motors, was more specific and said that India is one of the regions to be covered by this partnership. "With an aim to jointly contribute to resolution of social issues and sustainable growth of an automobile based society, TKM's parent company, Toyota Motor Corporation (Toyota) has signed an agreement today with Suzuki Motor Corporation (Suzuki) to collaboratively begin examinations for business partnership in areas such as environmental technologies, safety technologies, and information technologies. This is aimed to achieve sustainable growth with mutual business interests staying independently competitive in the market," he added.
But analysts covering the industry added that it should lead to further efficiencies in compact car technologies. The new partnership could prove to be quite crucial for India, where both companies have high stakes. Suzuki, in particular, has a 50 per cent share in the three million units-a-year market.
"It has been a challenge for any carmaker to cut Suzuki's pie in India, which has increased despite new global players like Volkswagen and Nissan joining the league. Its latest partnership will yield rich dividends in terms of technology access to Toyota's proven prowess, which in turn may consolidate its position in the smaller car segment with Daihatsu Motors (now Toyota's subsidiary) that still leads the Japanese small car market over Suzuki," said Abdul Majeed, auto analyst with PriceWaterhouse.
He added that considering the growth in the Indian automotive market, global OEM's have realised that they need to have very credible strategy (product development, distribution, after market services and export) going forward. "It will be difficult for OEM's to increase their volumes without growing in India. In addition, they are also looking at segments such as small cars and compact SUVs etc. Without strong portfolio in these segment it will be difficult to grow in the Indian market," he added.
Despite the partnership Suzuki and Daihatsu Motor will continue to sell vehicles under their separate brands to avoid risks related to antitrust laws, reports the Japanese media. Daihatsu will soon enter India, with an official announcement expected soon, after Toyota failed to compete in the local market with its Etios brand of sedan and hatchback that may be eventually discontinued. Maruti may well have to compete with the boxy, but low-priced cars from Daihatsu.