Volkswagen-Suzuki agreement ready for India run

According to the industry sources, Volkswagen, the German carmaker is likely to expand its global partnership with Suzuki in India by taking the design and manufacturing facilities of Maruti-Suzuki in India. Some of the top executives of Volkswagen made a visit to the factory of Maruti-Suzuki and had a discussion with the senior management of Maruti Suzuki, India’s largest carmaker. The officials of both the companies discussed various topics including the product design and rebadging cars. Both the auto giants will probably work together at the Manesar plant of Maruti-Suzuki. By using this production, Volkswagen is planning to increase its presence as well as marketshare in the Indian market.

Both the carmakers are developing a small car jointly which would be manufactured at the new plant. Volkswagen India chief, Mueller has said that the company intends to capture around 8% market share in the coming three–four years. At that time, the car market of India will hopefully reach 3 million. That comes down to about 2.5 lakh cars per year whereas Volkswagen’s total capacity stands at only 1.1 lakh. On the other side, Maruti-Suzuki chairman, RC Bhargava commented that the decision about any tie-up with Volkswagen would be taken by Suzuki Motor Corp. He made it clear that Maruti will have no role in that. Any development would be taken care of by the parent company. He also added that the new capacities can be taken up by the local demand.

Earlier, Osamu Suzuki, Suzuki chief had stated that they are considering at designing of components to begin with, but he had not commented upon how the partnership will grow. Volkswagen and Maruti-Suzuki are also considering the contract manufacturing relationships same as the one Maruti presently shares with Nissan. According to the agreement, Nissan sources Maruti’s A-Star small car from its Manesar factory. It sells these cars as Nissan Pixo in Europe. In December 2009, Volkswagen agreed upon buying 19.9% stake in Maruti Suzuki’s Japanese parent for $2.5 billion. Maruti Suzuki has also proposed a sixth plant that will have a total investment of Rs 1,925 crore.

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