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Published on : Jun 18, 2015

In a move to boost exports of Maruti Suzuki, the parent company Suzuki Motor Corporation has entered into a deal with Malaysian auto manufacturer Proton for the assembly and sale of an entry-level model in its domestic market. The deal would see Suzuki supplying completely knocked down kits of cars to Proton. Proton, started in 1983, is Malaysia’s first auto manufacturer and has 17% share in the market. In 2014, the car maker sold around 116,000 vehicles. 

According to a MoU signed between the two companies this week, the first model would be a compact passenger car which will be assembled by Proton at its plant located at Tanjung Malim. The assembling would start from August 2016. A decision to include other models would be taken after studies conducted by Suzuki Motor Corporation and Proton. 

In India, Suzuki enjoys more than 56% share in the market through its subsidiary Maruti Suzuki. Globally, Maruti Suzuki is the most profitable subsidiary of Suzuki Motor and has similar sourcing arrangements with other automotive firms. For example, the A-star hatchback manufactured at Maruti Suzuki’s Manesar plant in India, was sourced by another Japanese car manufacturer Nissan Motor, which sold it in Europe as Pixo. This helped Maruti Suzuki to increase its exports by 50,000 units per year. Also, Maruti’s Ertiga multipurpose vehicle is shipped to Indonesia for assembling. Internal sources have revealed that the car manufacturer’s other models such as Wagon R, Celerio, and the twin Alto models would be fit for the Malaysian market. 

Industry analysts have mentioned that the new arrangement will lead Suzuki Motor to regain some of the volume it had lost during the transition of Pixo, which turned out to be a great value addition to Maruti’s exports from the Manesar plant. Under the new agreement with Proton, the Indonesian manufacturer will assemble the cars at its plant and sell them under its brand.