Toyota & Suzuki take cross-badging route in India

NEW DELHI: Toyota Motor and Suzuki Motor on Thursday announced a cross-badging agreement under which the Japanese automobile majors will manufacture vehicles for each other in the Indian market.
Suzuki will supply premium hatchback Baleno and compact sports utility vehicle Vitara Brezza to Toyota, which will sell those under its own brand through its subsidiary in India. Toyota will supply its executive sedan, Corolla, to Suzuki to be sold through local unit Maruti Suzuki.

The deal allows both companies to address certain segments of the market where they have no or insignificant presence in India as well as run their factories at better utilisation rates. The two will also start joint sourcing for these vehicles, which will allow them to reduce cost. The pact may be expanded to hybrid vehicles as well.

The pact concluded on Thursday is the continuation of a MoU signed in February last year to collaborate in areas including environmental technology, safety technology, information technology, and the mutual supply of products and components. In November 2017, Suzuki and Toyota had finalised an agreement to introduce electric vehicles in India around 2020.




On Thursday, the companies said they would decide on the details of each model — such as the schedule of supply, number of vehicles to be supplied, specifications and pricing — at a later stage. A person close to the development said supplies under the agreement would commence only in 2019.

“Fundamentally, the agreement has been forged for exchange of vehicles between the two companies,” Maruti Suzuki chairman RC Bhargava said. The deal will enable Toyota to strengthen its presence in India’s intensely competitive small-car market, where it has limited presence with the Etios series. It will also help Maruti Suzuki expand its product range to the executive sedan segment with the Corolla Altis. At present, Maruti Suzuki does not have any product priced above Rs 12 lakh.

VG Ramakrishnan, managing partner at consultancy firm Avanteum Partners, said the agreement would benefit Toyota more in the initial phase as volumes were more in the compact segment. “In the medium- to long-term, however, Suzuki will gain access to green technologies which it can then go on to incorporate in its portfolio,” he said. Shekar Vishwanathan, vice-chairman at Toyota Kirloskar Motor, the local unit of the Japanese company, told ET: “This agreement will end up providing more choices to Indian consumers, hopefully at lower price points through better utilisation of available capacities.”

This would help drive up volumes. “The effort will also be to increase localisation content in models covered in the agreement, this would in turn give a fillip to the domestic component industry,” he added. “By competing with each other with the goal of mutual improvement, Toyota and Suzuki aim to invigorate the Indian automotive market to enhance their products and services,” Toyota and Suzuki said in their joint statement.

Vishwanathan declined to specify whether hybrid or electric versions of the models identified would be developed by the duo at a later stage. “We need to do deeper studies to determine which powertrain will be best suited for which model.” The companies said they remained committed to the widespread acceptance and use of less-fuel-consuming vehicles to help India reduce its environmental footprint and enhance energy security.