Suzuki Motor Corporation (Japan), the parent company of Maruti Suzuki India (MSIL), on Thursday, said that it needs to rethink its strategy as ‘the business environment has changed due to declining market share in India and intensified competition in electric vehicles (EVs).
In its New Mid-Term Management Plan (FY2021-FY2025), Suzuki Motor Corporation (SMC) said it has “Achieved revenue and profit targets ahead of schedule by improving sales mix and quality, and the effect of exchange rate, etc. even though sales volume target could not be met…On the other hand, the business environment has changed due to declining market share in India and intensified competition in electric vehicles. Need to rethink strategy.”
Some of the strategies it outlined include stabilising global supply by appropriately allocating production capacity based on the principles of local production for local consumption, developing powertrains in consideration of carbon neutrality targets, and considering infrastructure conditions in each market.
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It also outlined nurturing “the next India through expanding Suzuki’s business in the Middle East (West Asia) and Africa markets having huge growth potential by supplying product from India.”
The company also mentioned that India will be its global production and export hub for battery electric vehicles (BEVs), where it is building the capacity to produce four million units to respond to domestic demand in India and expand global exports (contributing to Make in India). It aims for a 50 per cent market share as the market leader in the Indian automobile industry. Currently, MSIL has around 42 per cent market share in the domestic passenger vehicles market, which used to be more than 50 per cent a few years ago.
As part of its management strategy, the company said it aims for profit growth through improved profitability by increasing sales volume and product and brand value amid an increase in the EV ratio, increasing labour costs, rising material costs (strengthening the supplier foundation, increasing in raw materials, energy cost, etc.), and other factors.
It said the company will make necessary investments to achieve higher profitability in the first half of the 2030s.
SMC said India is the most important market, which will continue to grow and serve as the engine for Suzuki’s future growth. However, the competitive environment is becoming increasingly severe, and the quality of product functions, equipment, and services required by customers is increasing.
For continuous growth, it will strengthen its product capabilities and lineup in the sports utility vehicle (SUV) and multi-purpose vehicle (MPV) segments, rapidly develop and introduce entry-segment products that meet the preferences of entry-model customers, and introduce BEV/HEV/CNG (CBG)/FFV, etc., best suited to local conditions for each region in India, it said.
The company also said that it would improve Maruti Suzuki’s product planning and development capabilities to develop and introduce products that better match the preferences of Indian customers in a timely manner, expand the BEV lineup starting with e Vitara, aiming to launch more BEV models by FY2030.
It also added that it will progressively define the roles of its two sales channels. Nexa will be more premium-oriented, while Arena represents a wider customer base and provides a comfortable customer experience.