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Old 11th December 2009, 02:34   #1
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Default Volkswagen-Suzuki to roll out Rs 2.5-lakh car in India

Volkswagen-Suzuki to roll out Rs 2.5-lakh car in India

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The Volkswagen-Suzuki alliance plans to develop a brand new small car for the Indian market in the Rs 2-2.5 lakh range, which could
replace the Alto when the Indian arm of Suzuki decides to retire its top-selling model.

"We will need a car in the Rs 2.5-lakh apiece range. First we had the M800, then the Alto. At some point we will need a replacement for the Alto. That price range is the entry level for Indian customers today, so we can't leave that segment open," Maruti Suzuki chairman RC Bhargava told ET.

Volkswagen and Japan’s Suzuki Motor had, on Wednesday, announced a deal which will see the German carmaker picking up a 19.9% stake in Suzuki for $2.5 billion. The companies plan to develop small cars and electric vehicles under both brands. The new car that will be priced at $4000-5000 in the European market will be the cheapest car from the Volkswagen stable below the Up, which carries a price tag of around $8800.

“Volkswagen will be greatly interested in a car below the price segment of the Up, which we have already displayed in India, and that is something we will need to check in our future together with Suzuki,” Fabian Mannecke, the spokesman for Volkswagen, told ET.

Volkswagen is launching its Polo hatchback in India next year, which will be pitted against the Suzuki Swift and other premium hatchbacks such as the Hyundai I20. Mr Mannecke said VW was not targeting the Nano segment. Currently the cheapest product from Suzuki stable is the M800, which will get phased out in 11 large cities across India that will adopt Euro 4 emission standards in 2010.

The alliance will mean serious competition for Tata Motors diesel cars Indica Vista and Indigo, said Manish Mathur, principal at AT Kearney. "The cross-pollination of technology, product architecture and product development will mean both Suzuki and VW will now be able to bring in more diesel options, especially in small cars," he said.

Although the contours of the partnership are still being worked out, both partners are interested in developing common platforms. Sharing platforms will enable VW to use Suzuki for contract manufacturing both in Japan and India. Mr Mannecke said the option of using Maruti Suzuki's plants to manufacture VW cars for European markets-a strategy that Nissan is already employing-is something VW management is thinking about.

While VW is looking for a small car in the price range of euro 2000-2500 ($4000-5000) with which it can not only drive bigger sales in India and Europe, Suzuki is looking to source diesel engine technology from the German company.

"Suzuki does not have diesel technology and that is one of the main things that will interest them in the future," Mr Mannecke said. Suzuki's current diesel engine used in the diesel versions of Swift and Dzire, is sourced from Fiat through a three-way partnership with GM and Fiat.

However the global partnership will not result in the two companies sharing distribution and dealership networks in India. According to VW officials, the main focus of the synergy, particularly in India, will be on back-end areas like production and purchasing of parts.

"Volkswagen and Suzuki are getting into this cooperation with a strategic view but each brand will retain its own outlook for the customer. Nothing will be shared at the front-end including dealerships and distribution networks. The synergy will be at the back-end in production sharing and common purchasing of components," Mr Mannecke said.

GM too had a 20% stake in Suzuki Motor, but did not have any front-end partnership with Suzuki in the latter's most profitable market-india. India now contributes around 80% of Suzuki's profits in the first half of this fiscal year, up from 33% in 07-08. The Indian arm contributed 20% of Suzuki's consolidated turnover in the fiscal half.

Maruti Suzuki doesn't see the alliance impacting the company's policies. "Maruti Suzuki is 54% owned by Suzuki, which drives the management and policies. So unless there's a change policy in Japan, which seems to me unlikely, things wont change. If GM at 20% stake did not disturb Maruti, why should Volkswagen?" said Mr Bhargava.
Contrary to speculation in some other thread, VW wants synergy with Suzuki only for the back end operations, sparing the dealership network.
Don't see this happening in near future though!!!
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Old 11th December 2009, 04:25   #2
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there are mention about this in SUZUKI FAN

that the car will codename YP8 and may be see concept at auto expo
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Old 11th December 2009, 07:04   #3
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Wasn't the A-Star supposed to replace the Alto?
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Old 11th December 2009, 07:19   #4
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^^^
One way its good. Keep the companies separated and competing with each other so that we the customer is benefited. Polo competing with Swift to keep either prices in check?
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Old 11th December 2009, 08:40   #5
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Originally Posted by khanak View Post
Wasn't the A-Star supposed to replace the Alto?
ANd Alto was suppose to replace 800

You know this happens in business. You plan to stop some model, but then it keeps selling without any efforts. So why not continuing?

Seen decline in 800 sales after decades. So, may be they do it now.
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Old 11th December 2009, 08:46   #6
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If Suzuki VW small car works out and rolled out soon then that will be a boon for the second car choosers as well as the entry level owners. Hope to hear more news about it soon after the sale of Suzuki stake to VW,
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Old 11th December 2009, 08:51   #7
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VW needs this alliance more than Suzuki. This seems to be part of their strategy of expanding in developing markets now that the developed markets have all saturated or declining.
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Old 11th December 2009, 09:07   #8
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Originally Posted by theMAG View Post
VW needs this alliance more than Suzuki. This seems to be part of their strategy of expanding in developing markets now that the developed markets have all saturated or declining.
I feel it is a mutually beneficial alliance for both VW and Suzuki. They both have their strengths and weaknesses and hence they want to leverage these and become a dominant player. After all, this will help them rationalize a lot of things and become effective and profitable for their shareholders.
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Old 11th December 2009, 09:20   #9
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well, we did need a 800 replacement and it was long due. Since both Alto and 800 was selling in high numbers, MS did not think about stopping the production of 800.

Now with VW, we might expect a new brand of entry level cars
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Old 11th December 2009, 09:44   #10
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Originally Posted by MutantX View Post
well, we did need a 800 replacement and it was long due. Since both Alto and 800 was selling in high numbers, MS did not think about stopping the production of 800.

Now with VW, we might expect a new brand of entry level cars
What does this mean for all the people who are still buying new 800 and Alto. These models are no more long term prospects so better avoid them.
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Old 11th December 2009, 09:44   #11
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That's what happens when you forget your roots.

The M800 was replaced by the Alto worldwide and then later by the A-Star. So logically they do have a car that they can offer in that price band, but to take on the I10 they positioned the A-Star with more features and priced it close to the I10 and now they are looking out. They could instead have positioned the A-Star base in the 2.5 to 3L range and left the Ritz to battle the I10 and they would not have fared as badly as they have in the A-Star.

It is a good vehicle but over hyped about the segment in which it comepetes.

so now Suzvag will come out with another vehicle similar to the A-Star to take on that segment - funny circle.
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Old 11th December 2009, 09:45   #12
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Please note that they had mentioned "at some point of time" which can also be read as years.
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Old 11th December 2009, 09:48   #13
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1) Maruti is developing a car code named YR9. It is supposed to be new Wagon R or updated Wagon R.

2) Maruti is developing another small car code named YE3.

3) So this is a another small car ?
IMHO, NO.
Just 19.9 % stake by VW in Suzuki and it instantly became " VW-Suzuki " to roll out ... This is what I feared. Suzuki name will get drowned inspite of the fact that the car will be developed by Suzuki and worked on by Suzuki.
And I am sure that any small car from this joint venture will not feature " high build quality VW advanced, efficient and eco friendly " petrol. It will feature Suzuki's motor.

I am sure that they car they are talking about is either of the two. Any more model, Suzuki will have its showroom floor severely over crowded.

Half of the amount VW will pay to Suzuki will be used by Suzuki to buy stake in VW.
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Old 11th December 2009, 10:15   #14
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Originally Posted by ACM View Post
The M800 was replaced by the Alto worldwide and then later by the A-Star.
A small addition (may be an OT):
In the international market there were 4 generations of Suzuki Altos so far. At least those I have seen (not read anywhere). We have seen all 4 models in India in this order:
800
Zen
Alto
A-Atar
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Old 11th December 2009, 11:24   #15
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Quote:
Originally Posted by theMAG View Post
VW needs this alliance more than Suzuki.
+1 to that. Also, the remark made by Osamu Suzuki that they dont want others telling them how to run the business reaffirms it.
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