Three days after settling a drawn out dispute over their joint auto venture, Suzuki Motor Corp. and the Indian government have decided to review overall production at Maruti Udyog Ltd. in a bid to boost its competitiveness, the automaker’s president said Thursday.
The remarks by Osamu Suzuki were made after the nine-month row over management of the 50-50 joint venture ended Monday. MUL claims more than 80 percent of the Indian car market. “Because of the dispute, our product plan, including introduction of a new model, has been delayed,” Suzuki told reporters.
Suzuki said he hopes to start a new model within two or three years to replace the Maruti 800, which was introduced to India in 1983. Suzuki will launch negotiations with the Indian government over ways to procure funds to increase its Indian plant production capacity, he said.
The company’s initial plan to increase annual production capacity to 500,000 units must also be thoroughly reviewed, he said. Last year, Maruti manufactured 354,336 vehicles.
Under increasingly competitive market conditions, Suzuki said the company cannot merely increase production capacity based on its earlier predictions. He said the firm should reconsider the whole lineup to stay competitive with their newly arrived foreign rivals.
Competition in the India auto market began intensifying after the government liberalized it in 1996, paving the road for entry by the world’s major automakers last year.
And impending competition, in fact, was what forced them to settle the MUL dispute, Suzuki said. “Both Suzuki and the Indian government recognized the importance of raising Maruti as an internationally competitive company,” he said.
Although it was widely reported before the dispute that Suzuki was seeking to raise its stake in the joint venture to better control the company’s management, Suzuki said there is no plan to increase its holdings from the current 50 percent. “As long as we approve the decisions of one another beforehand, we can jointly manage the firm well,” Suzuki said. “We don’t plan to hold more shares of the company.”
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