Why Toyota And Suzuki Need Each Other In India: Foreign Media
Toyota has a problem with India.?
The world's biggest carmaker is a bit player in a country that's forecast to become the third-biggest auto market by 2020. Honda, Hyundai, and Mahindra & Mahindra each take a share of unit sales bigger than Toyota's 4.6 percent. In the compact car segment that dominates the local market, its position is even worse:?
The real Indian elephant in this room is Maruti Suzuki, which has almost half the country's auto market to itself and is now worth about 60 percent more than its Japanese controlling shareholder, Suzuki Motor. That dynamic helps explain why Toyota and Suzuki are burying a history of rivalry to start working together more closely.?
Maruti Suzuki's position in the Indian market looks formidable, but there are sooty clouds on the horizon.?
Toyota's Indian market share 4.6% ?
India is home to half of the world's 40 most-polluted cities, due in no small part to the number of vehicles already on the roads. Accommodating the rapid growth in the country's car fleet while keeping some minimum standards of air quality has already caused wrenching changes. ?
The Maruti 800, the car that got India's middle classes mobile quite as much as the Ford Model T or the Toyota Corolla did in the U.S. and Japan, ceased sales in major cities in 2010 due to its inability to meet rising emissions standards. Motorbikes and scooters with two-stroke engines, once ubiquitous on India's roads, have all but disappeared since tighter regulations drove a move toward four-stroke two-wheelers starting in 2000.?
India's auto industry now risks becoming a victim of its own success, as regulations inevitably ratchet tighter to avoid choking city-dwellers. Prime Minister Narendra Modi's government plans to introduce stricter vehicle-emissions rules four years early, bringing India in line with European standards commenced in 2014. Other directives are less predictable: the country's Supreme Court temporarily banned new registrations of some diesel vehicles in New Delhi last year, hurting demand for Toyota and Mahindra SUVs.?
The problem for Suzuki and Maruti Suzuki in this brave new world is that they simply don't have the budget to win the race to develop new emissions technologies. With electric, hybrid, and driverless vehicles prompting some of the most dramatic changes in the auto industry since the invention of the internal combustion engine, they need to piggyback on the expertise of bigger players.?
While Suzuki has been working on new-energy vehicles and reportedly has a plug-in hybrid version of its Swift due for Indian release under Maruti Suzuki next year, most of its know-how to date has focused on so-called mild-hybrid technology. This offers some of the benefits of new-energy vehicles, but doesn't allow for driving under electric power alone.?
That's not going to be good enough as India's auto demand grows. The country needs a faster transition to new-energy vehicles, for the sake of both its public's health and its oil-import-dependent economy.?
Toyota needs Suzuki for its connections in the world's next major car market. Suzuki and Maruti Suzuki need Toyota for its brains.?
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.?
? 2016 Bloomberg L.P
To contact the author of this story: David Fickling in Sydney at dfickling@bloomberg.net?
To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
