[skumar]

Maruti increased price hike of all models today to retain profit margins.

Maruti hikes prices by up to Rs 7,500 across segments

Maruti hikes prices by up to Rs 7,500 across segments-Automobiles-Auto-News By Industry-News-The Economic Times

[shortbread]

Suzuki is primarily a cheap small car maker. It is what they are good at and what they make their money from. Now if they move their R&D to India to develop these small cars then theres not a lot left for Suzuki Japan to do, is there?

Suzuki will need to justify a Japanes operation if most of the manufacturing and development is moved to India. So therefore each Maruti bought has to take a share of some jap sans wages.

Hopefully, now under a dominating parent like VW, who have taken Suzuki only for their small car expertise (another generation down the line the likes of Vitara & Kizashi should use a VW platform, if they decide to make it at all) will realise the potential in India and shift focus. VW is reputed for sharing platforms but has given the likes of Skoda & Seat their independence as well.

[romeomidhun]

Source: Suzuki could start paying royalty to Maruti


"High royalty payments by the country’s largest passenger car manufacturer Maruti Suzuki to parent Suzuki Motor Corporation of Japan could soon become a thing of the past. With growing efforts to develop a technology hub in India, which would be up and running by 2015, the opposite is set to happen, when the Japanese firm starts paying royalty to Maruti. Maruti Suzuki chairman RC Bhargava told FE that once Suzuki starts sourcing technology from the company’s R&D centre at Rohtak, the trend may reverse. “There is logic in Suzuki Motor paying a royalty to Maruti...the issue is bound to be addressed at an appropriate time. However, there’s no point discussing something that will come up in 2015,” Bhargava added. The R&D centre is planned to be a hub for Suzuki’s global operations.
The issue of royalty and the possibility of Maruti demanding it from Suzuki in the future attracted the attention of analysts on two recent occasions. The first was during the first quarter when Maruti’s net profit declined 20% on account of higher royalty payout to Suzuki. It paid a royalty of Rs 188.70 crore or 5.9% of its total revenues during the quarter. This included some arrears too, which were on account of the royalty being revised because the government has removed the cap of 5% on sales in domestic market and 8% on overseas sales. This enabled the Japanese parent to revise royalty rates."


This also shows that something is not going well between Maruti and Suzuki. Right?

[ramzsys]

Well this is to pacify the existing shareholders to hold on. 2015 is a long way from now, atleast for the car industry.

[gshanky]

Originally Posted by ramzsys

Well this is to pacify the existing shareholders to hold on. 2015 is a long way from now, atleast for the car industry.

I don't think this is a gimmick to pacify the shareholders. Suzuki is in deep trouble world over, They just cut 50 dealers in US. Initially they wanted to cut 150, but only 50 of the dealers accepted their offer.

Here is a link for detailed study - Report: Struggling Suzuki cuts 50 U.S. dealers — Autoblog

[sandeepmdas]

Maruti pays whopping 1780 crores as royalty to Suzuki for the K-series engine alone.

Compare that with the R&D budget for Tata motors: 1500 crores only.

This could end up killing Maruti Suzuki! : Rediff.com Business

[airbender]

Originally Posted by sandeepmdas

Maruti pays whopping 1780 crores as royalty to Suzuki for the K-series engine alone.

Compare that with the R&D budget for Tata motors: 1500 crores only.

This could end up killing Maruti Suzuki! : Rediff.com Business

For that money they could probably buy a engine tech company.

[blackasta]

I was reading through the rediff.com article today, and feel that its high time Maruti sets up its own RnD in India. But I do not know if that is possible as Govt. is no longer in control of MUL - now MSIL. This way Suzuki - without selling any substantial number of cars around the wolrd can still post profits in Japan, thanks to royalty money siphoned off from India.
That too by dumping dies of old Japanese models and selling cars 25 years old.

[blue_pulsar]

Oh no! If Maruti start setting up their own R&D, we will see a Indica Gen 1 like car from Maruti. I'm ready to pay few thousands extra for the expertise that Suzuki has. Suzuki has always manufactures excellent small car engines. Zen, Esteem, Baleno and now the K-series. Each of these a drivers delight, efficient and reliable.

Already Maruti engineers have proved their capability in facelifting the old Zen, old W-R, the present W-R, Swift Dzire. Surprisingly, the Alto facelift has looked better and better each time.

Originally Posted by blackasta

That too by dumping dies of old Japanese models and selling cars 25 years old.

Actually, its our mistake buddy. We're still buying the M800, Alto, Esteem(till recently), Eeco, Estilo etc. If people stop buying old models like they did in case of M-800, we will get better products. Maruti has learnt that lesson well with the Estilo.
But on the brighter side, we also have the Swift, SX4, Splash, Alto (A-star), new W-R. These are global models. Only bad thing is their plastic quality and safety compared to their global models.

[rajess_in]

Originally Posted by blue_pulsar

Oh no! If Maruti start setting up their own R&D, we will see a Indica Gen 1 like car from Maruti. I'm ready to pay few thousands extra for the expertise that Suzuki has. ...drivers delight, efficient and reliable.

Already Maruti engineers have proved their capability....

But on the brighter side...These are global models. Only bad thing is their plastic quality and safety compared to their global models.

I think Maruti is well set for devloping its own R&D facility, since all of its engineers are trained directly by Suzuki, Japan. Currently, Maruti's engineers do back office tasks (localisation of components, cost reduction, etc.) rather core R&D from what I have heard.

But the interesting fact is Suzuki is in direct control of Maruti having a major control stake and still treats it as some third party user. And till date, Maruti has to import the gear boxes from Suzuki Japan, which also increases their earning from Maruti.

But honestly, Suzuki is one of the best 'Kei' Class vehicle manufacturer currently, and their association with VW will only benefit VW as a whole (since VW group has put its ultimate Business Goal as replacing Toyota from the top)

[CARDEEP]

Originally Posted by blue_pulsar

Oh no! If Maruti start setting up their own R&D, we will see a Indica Gen 1 like car from Maruti. I'm ready to pay few thousands extra for the expertise that Suzuki has. Suzuki has always manufactures excellent small car engines. Zen, Esteem, Baleno and now the K-series. Each of these a drivers delight, efficient and reliable.

Sorry, I do not agree with your comment that Maruti-Suzuki should not have R&D facility in India. Do you have doubts about the capabilities of engineers produced by IITs, RECs & various other engineering colleges in India. I have no doubt though I am not an engineer... I am a CA. With the limited means if they can get do something, I bet with with all facilities they will produce a car better than Kizashi that too from Gurgaon (or as matter of fact from any part of India, & with any manufacturer).

Regarding their superior technology, please let Mr. Osamu Suzuki launch a car under INR 1.5 lacs, & then we will discuss the matter of their engineering superiority. Please note that they have Kei (small) cars that have engines little bigger than Nano's, but they are priced well higher than Indian Swift.

This thread is appropriate as Suzuki & its Jap bosses are living off on Indian money for a long time (which was essentially taxpayers hard earned money that could have been well spent on developmental projects rather than crowding the roads & creating pollution). Even these days after Govt sold off its shareholding to Suzuki for peanuts, Suzuki is surviving because of India to a great extent & I have no doubt about it.

For your information, if their engineering or so called engineering knowhow was so better why would thousands of Indian (& other South-East Asian) engineers would be working in Toyota, Honda, Mitsu, Yamaha & Suzuki factories in Japan at various levels (Kindly note that I have a friend there).

[Equus]

Isnt it completely an internal company matter as regards to who pays royalty to whom? I dont care as far as we get decent products that offer immense value proposition. MSIL does that too well and as a country, we have benefitted for the last 26 yrs! Most of the cars sold are cheap to buy, cheap to run/maintain, universal service network - what else can one ask for? Why wouldnt you love this company?!!

If you have the money and attitude, go buy the likes of Beetle!

[nkrishnap]

Originally Posted by Equus

Isnt it completely an internal company matter as regards to who pays royalty to whom? I dont care as far as we get decent products that offer immense value proposition. MSIL does that too well and as a country, we have benefitted for the last 26 yrs! Most of the cars sold are cheap to buy, cheap to run/maintain, universal service network - what else can one ask for? Why wouldnt you love this company?!!

If you have the money and attitude, go buy the likes of Beetle!

Agree on this to an extent just as a consumer. But what about something known as the shareholder value? Agree that Suzuki has a stake, but does that mean they can take away the shareholders wealth under the name of royalty and not letting the Indian counterparts develop and launch its own product. Whats the need for such restriction if Suzuki is not really worried about taking away the money under the name of royalty?

Maruti with its current breed of engineers are more than capable of providing a car which is equivalent to the Suzuki's technology if not better.

[tj123]

A bit off topic but it is true that Suzuki is the market leader in one country ,India and that too because it was an early mover.
In all major markets Suzuki has been beaten down due to lack of impressive /competative products.

Only time will tell how long Suzuki will hold its turf before yielding to competititon.

[CARDEEP]

Originally Posted by tj123

A bit off topic but it is true that Suzuki is the market leader in one country ,India and that too because it was an early mover.
In all major markets Suzuki has been beaten down due to lack of impressive /competative products.

Only time will tell how long Suzuki will hold its turf before yielding to competititon.

I reckon it will long enough before we see someone actually displacing Suzuki from the top. The widespread A.S.S. & some good products are enough to draw people to showrooms for another 10 years IMO.