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Published on : Mar 30, 2018

Strategic collaborations are showing the way for a few globally prominent automakers to tap into emerging markets and notch up a sizeable share in the automotive industry.  Toyota Motor Corp, a Japanese multinational automotive manufacturer, has long been eyeing a marked share in the India market and has been producing cars specifically for the region since 20 years. But the tanking sales of its low cost models and declining demand for its mass segment cars have proved that the India automobile market is a hard nut to crack. In a bid to bolster its share, the Japanese automaker announced on March 29, 2018 that it has entered into a collaboration with another rival automaker headquartered in Hamamatsu, to produce cars mutually for each other. The rival, though considered smaller in size, has a sizeable stake in India automobile market through its subsidiary Maruti Suzuki India Ltd (the Japanese automaker has a majority share). The Indian automaker is a prominent player in India, considered as being one of the largest passenger cars market world over, and has been brimming with sales with its offering of low-priced compact cars segment.

Synergy to enable Toyota to Bolster Distribution Network and Ramp up its Share in India Automobile Market

Under the collaboration, which followed a research and development (R&D) tie-up announced by the Japanese automakers in 2017, the automakers will mutually cars in the country starting next year. Specifically, Suzuki will supply rebadged versions of Baleno hatchback and Vitara Brezza, a compact SUV, to Toyota while the later will produce Corolla sedans, gasoline and gasoline-hybrid compact cars, under the former’s behalf. In addition, Suzuki vehicles will be marketed as Toyota cars and vice-versa. Manufacturing of the vehicles will start somewhere in mid-2019. Furthermore, under the pact, the two companies will tentatively introduce electric vehicles (EV) in the country by 2020.

Maruti to leverage on Toyota’s R&D to produce Lower-emission and Autonomous Vehicles

According to Maruti Suzuki India Ltd., the company has sold over a million vehicles in 2017 and agreeing to produce 50,000 vehicles for Toyota Motor Co. just accounted a mere percent of that.  

Though further details on production figures are declared by the two automakers, as revealed by the Nikkei report, a renowned Japanese daily newspaper Toyota will supply 10,000 units to Suzuki, while the latter will produce 30,000 to 50,000 vehicles to the former. Of note, Suzuki has been unable to keep up pace in India in lower-emission vehicles and autonomous segments, and the deal will lend competitive benefits for the same.