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Old 22nd May 2010, 22:17   #1
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Default Maruti, VW officials jointly explore synergies

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Source : Maruti, VW officials jointly explore synergies

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Maruti, VW officials jointly explore synergies
NEW DELHI: Top officials of the country's largest carmaker Maruti Suzuki and Volkswagen India are understood to have met on Friday to explore synergies in production and vehicle design.

After German auto major Volkswagen (VW) picked up a 19.6% stake in Suzuki Motor Corp (SMC) last year for $2.5 billion, there has been speculation that they may look for synergies in India, the world�s second fastest growing car market after China.

The most strong possibility of this global tie-up between Suzuki and VW may lead to synergy in production areas, where VW may leverage Maruti Suzuki's expertise in high volume production at a very competitive cost and efficiency, a source said.

According to sources, the two companies are exploring synergies in areas such as product design not necessarily sharing models or joint model development and product testing, evaluation or part designing of future models and special projects.

The sources, however, ruled out any possibility of sharing distribution networks between the two firms as a major point that clearly emerged out of this discussion indicated that in the area of retailing, Maruti Suzuki will be a competitor to VW.

It is believed that the top management of Maruti Suzuki India (MSI), while the VW India team was led by its president, Joerg Mueller. A new entrant in India, VW is yet to gain ground in the country.



When contacted, a spokesperson of MSI said: This issue is being handled by SMC, Japan. We have no comment to offer on this please. Comments could not be obtained from VW India officials.

A new entrant in India, VW is yet to gain any firm ground. It started production in India from this year at its Chakan plant, where it invested around Rs 3,500 crore, having a capacity to produce 1,10,000 cars a year.

In contrast, MSI is the largest auto brand in India, commanding over 55% of the car market, and is inching towards sales of 2 million units annually. MSI is also ramping up its research and development division with over 1,000 engineers and investing around Rs 1,500 crore in an upcoming R&D centre at Rohtak, to be used for developing cars for India and the ASEAN region. This would be the largest R&D centre of SMC outside Japan.

Later in the day, VW Corporate Communication Head (In-Charge Suzuki Affairs) Peik Bestenbostel said from Germany: We don't display the contents of our meetings... We are working on several projects (with Suzuki), which are not announced publicly.

He said the ongoing discussions between the two auto majors over the last few months covered the entire business in different parts of the world. �There is no final decision on anything yet, Bestenbostel said.
And this :

Source : Suzuki holds discussions with VW for common projects

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Suzuki holds discussions with VW for common projects
Teams from Suzuki Motor Corporation have visited Volkswagen India's Chakan plant for discussions on common projects.

I can confirm that visits have been taking place (to Chakan) and the teams have been sitting together to define common projects, Mr Joerg Mueller, President and Managing Director, VW India Pvt Ltd said. While experts believe that VW will look to leverage Suzuki's expertise in the small car segment in India, Mr Mueller said that the discussion of launching the Up in India was still underway.

At present it is in the small car segment is the biggest in the Indian market, he said, adding that a decision on the project with Suzuki would be taken in the next few months.

Meanwhile, VW has begun trial production of a new Sedan developed specially for the Indian market at its Chakan plant.

The car is expected to be launched in September.

The segment of sedans is huge and growing. We have begun trial production of a new sedan, positioned between the Polo and the Jetta and will launch it by September, Mr Mueller said.

According to company sources, the car will also be launched in Russia, though it will be tweaked for the requirements of that market.

VW also announced the inception of the Polo Cup India 2010. Twenty drivers selected from over a 1,000 applications across India will participate in the race that will debut at Pune on the last weekend of May. Five more races will be held at Coimbatore and Chennai and winners may get to compete in other circuits where the Polo Cup is held. The drivers will use the Race Polo fitted with a 1.6 litre diesel engine.
IMHO, this is a wrong move by Suzuki. VW will eat the strengths of Suzuki like reliable engineering that is also cost effective. The cost of spares is my major concern. The only truly affordable brand in India will lose its cost competitiveness if VW steps in.

Remember that it was VW that was about to strike deal with Indian government for small car in India. At the end of the day Suzuki got the deal but VW seems to be serious about getting its name big in India but in a negative way ( just my thoughts considering the current range of VW's cars cost of ownership, cost of spares and service ).
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Old 22nd May 2010, 22:26   #2
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Nothing to be alarmed about as of yet.They are most probably looking for synergies in back end operations like vendors,logistics,stockyards better valuation raw materials(for VW) due to the scale.
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Old 22nd May 2010, 23:29   #3
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It will take quite some time to scale it up to the level that they are talking about. By that time, texture would have changed.
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Old 22nd May 2010, 23:38   #4
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What Maruti lacks is in the premium car segment and what VW lacks is the lower wagon/hatchback segment. If they can collaborate and use each others sourcing and distribution, I see it as win-win for the combination.

This is also very good for the Indian Consumer.
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Old 6th August 2010, 17:35   #5
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Suzuki wont share platform with VW in India.

Source : Suzuki won't share platform in India with Volkswagen

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NEW DELHI: Suzuki Motor will not share its car platforms in India with Volkswagen, which holds a 20% stake in the Japanese carmaker, a senior official said on Wednesday.

There is no possibility of platform sharing (with Volkswagen) as the German company's production and product development costs are very high and that could make our business unviable, Shinzo Nakanishi, MD and CEO of Maruti Suzuki India, told ET.

In fact, the association between the two carmakers may be limited to sharing production facilities for contract manufacturing.

"There is a possibility of an original equipment manufacturing deal with Volkswagen, like the way we have with Nissan which sells hatchback A-Star as the Pixo in Europe, said Mr Nakanishi.

The move may upset Europe's largest carmaker's ambitious plans for India, one of the fastest-growing auto markets in the world.

When Volkswagen picked up a 19.9% stake in Suzuki Motor Corp for $2.5 billion last year, the two companies said they would explore possibilities of vehicle development and joint production.

After all, one clear reason for the deal was Suzuki's strong presence in India, a crucial market if Volkswagen were to reach its goal of becoming the world's largest carmaker.

Volkswagen has been looking at controlling costs by harnessing Suzuki's production practices and generating volumes in the small car segment as global market shift towards compact cars.

Now, it may have to do it the harder way.

Mr Nakanishi said the European firm can learn a lesson or two in frugal manufacturing from Maruti. Volkswagen's cost of products is high whereas Maruti's product management costs are very low; so they can learn from us, he said.

But Maruti Suzuki does not want to tap Volkwagen India's facilities to overcome its current capacity crunch. They are too expensive, said Mr Nakanishi.

He, however, said Suzuki and Volkswagen may make some solid global announcements in the next six-to-eight months. Some project may come out by the end of this year or early next year. It takes time as both companies are very big, so to find synergy is not easy. They are doing some discussions, Mr Nakanishi said.

Top Volkswagen executives had visited Maruti's factories in Gurgaon in May this year and met its top brass to explore synergies. The companies are exploring synergies in areas such as product design not necessarily joint development and sharing of models and product testing, evaluation or part-designing of future models and special projects.

While Suzuki is keen on getting Volkswagen's technology, particularly smaller diesel engines, the German firm is interested in Maruti Suzuki's expertise in high volume production at a very competitive cost and efficiency.

At the time of announcing the deal, analysts and auto experts had said that the German company will look to ride on Maruti's formidable small car core competence in joint product development and purchasing synergies.
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Old 6th August 2010, 18:03   #6
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Quote:
Originally Posted by srishiva View Post
I see it as win-win for the combination.
+1; or how about Volkwagen cars getting serviced at M.A.S.S; a Skoda for instance , atleast to begin with?

Hope this isn't too much to ask
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Old 6th August 2010, 18:17   #7
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There is no possibility of platform sharing (with Volkswagen) as the German company's production and product development costs are very high and that could make our business unviable, Shinzo Nakanishi, MD and CEO of Maruti Suzuki India, told ET.


Unless he is talking about a premium sedan, why would Suzuki want to share a VW platform in India?

For a small car, shouldn't it be the opposite? The platform sharing question should have been asked to VW.
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