The glimpses of low-priced cars is bright in India with Volkswagen is bearing the torch to roll down Rs2.5 lakh car, ideally associating with Suzuki. This will materialize when the Alto is put under the shed by Suzuki in India. Suzuki is keen on finding a replacement for Alto, which was once an alternative for 800 and the price level is to be at the entry-level for the affordable Indian customers.Suzuki does not want to lose the dear and top selling model.
Under the new pact between Suzuki and VW, the latter will have 19.9% stake worth $2.5 billion and will involve in producing small cars and electric vehicles common to both brands. From the European market point of view, the new car will cost $4000-5000 and will be the cheapest car (still much below VW’s Up @ $8800). VW has been in the search for a car below than its Up in India and the timely tie-up with Suzuki is likely to yield this.
This will add charm to VW’s Polo slated for release in next year to vie Suzuki Swift and other premium hatchbacks like Hyundai i20. VW doesn’t bother about the rise of Nano but will keep in mind the rise of M800 which is to be withdrawn in 11 cities from April (in abeyance with emission norms). The pact will have much impact on Tata Motors in the rise of Indica Vista and Indigo.
The reason being the amalgamation of multi-technology, product architecture and product development between these two companies in adopting the diesel modes for the cars. The deal will pave way for both companies to share common platform by which VW will utilize the plants of Suzuki in Japan as well as India. VW wants to enjoy the privilege exhibited to Nissan in sharing the manufacturing plant of Maruti Suzuki in India.
VW will avail the major share in small car segment in India ($4000-5000 / 2000-2500 euro) while Suzuki will learn the diesel technology from the German maker. Presently, Suzuki employs the diesel technology derived from Fiat under the tri-partnership among Suzuki-GM and Fiat. Both companies, however, will have separate identity for marketing the vehicles, with VW only availing the technical know-how from Suzuki. VW will be the next big automaker to General Motors with 20% stake, to have this kind of deal with Suzuki. The total contribution from Suzuki’s profits comes from India (80%)during the first half of fiscal with an increase of 33%.
The net turnover for Suzuki has received a sum of 20% from India during this fiscal half. This sort of pact are not policy decisions. Suzuki’s stake in the Maruti Suzuki tie-up is 54% thereby the policies are framed by the management. If at all any change is to implemented, the apex body has the mandatory power. Hence there won’t be any damage to the functioning of Maruti either thro GM nor through VW.