[AMG Power]

This is the way the cookie crumbles. Suzuki quit the US sometime back and now its quitting China. The excuse is that it wants to focus on India. Do you believe that? Read on to decide whether you do.

The diminishing popularity of small vehicles has had a significant effect on Suzuki in China. A new report from NHK World says that the company will stop producing cars in China and may focus resources on India, which is an important market for it globally.Demand for smaller vehicles in China is reducing.

Suzuki has already stated that currently, it is prioritising investment for growth centered in India. India is the company’s main overseas market, where it sold 16,09,086 vehicles in 2017. Relatively cheaper and popularised by the sub-4 metre rule, B-segment cars are going to be in a very high demand for the foreseeable future. The A-segment is also dominated by Suzuki.

In China, customers are increasingly demanding luxury models and larger vehicles. Another hindrance in growth Suzuki may have to contend with is the country’s law that pushes automakers to produce more and more New Energy Vehicles (PHEVs, BEVs and FCEVs).

Suzuki operates in China via two joint venture companies: Changhe Suzuki Automobile Co. and Changan Suzuki Automobile Co.

Just a few days back, the company announced the dissolution of its partnership with Changhe Automobile.

Suzuki has big plans for India. By 2020, it plans to sell two million vehicles annually here. To cater to the growing demand, its local subsidiary plans to grow its sales network to 4,000 outlets by the end of the decade. In 2020, the first-ever Maruti Suzuki EV based on the Maruti Wagon R will be launched in 2020. Also, Suzuki has formed an agreement with Toyota to share vehicles and technologies in India.

Source

[landcruiser123]

I read a few months ago that India is Suzuki's most important market and contributes to more than 50% of its baseline. I think domestic competition in China is far stronger and Suzuki is almost running a monopoly here.

With the new Toyota-Suzuki partnership, it makes a stronger case in India for smaller EVs- Suzuki designing the platforms and Toyota optimizing the drivetrains. I'm not sure what the specifics of platform sharing agreement between Toyota and Suzuki are, but I just hope Suzuki doesn't get to run a monopoly by the end of the next decade. I don't want to see a formidable Suzuki from an Alto to a Camry.

I need to see more competition in the car.

[dark.knight]

The main problem with Suzuki is that they never were too big in R&D, model portfolio planning and upgrading. Sure, the Maruti/Suzuki fans in India can say that they brought in the Baleno as a large hatch, but it was nearly a decade after the S-RV, Fabia and i20, that they brought it in the Ignis but that niche was already with them.. Ignis just slotted in-between their existing models Wagon-R and Ritz (I still consider Ritz to be their best built small car). They have brought in the S-Cross, but not with in-house engines and also they have a huge hole where they used the have the SX4 (a vastly superior car ride-quality wise to the present Ciaz) and the Kizashi, but even there the SX4 was a re-branded Fiat Sedici.

Playing as a global seller needs way too much investments, marketing and R&D. Suzuki's investments and marketing are literally zero (not talking local investments.. but rather investments in engineering talent, technology development and in-house production). Today only about 3 companies have the budget to try and enter every territory possible and make a name for themselves - VWAG, Hyundai, Toyota.

China may be the land of the rising sun, but often nothing other than that rises out of China, save for home-grown brands which also pay tribute to global brands. Suzuki is right in this regard.. the top 10 cars which sold in China in 2017 are :

Baojun 560 - SUV
GAC Trumpchi GS4 - SUV
VW Sagitar - A Jetta-esque model which looks like a Passat
VW Jetta - A Jetta which resembles a Vento
Nissan Sylphy - A Nissan Sunny with all the letters in-between modified.
Baojun 730 - A MUV
Buick Excellente GT - Aka Opel Astra
VW Lavida - Notwithstanding a Spanish name, this is yet another Jetta remix
Great Wall Haval H6 - A SUVish MUV
Wuling Hongguang - A boxy MUV[1]

All big cars, and all indigenous brands save for VW which surprisingly has found favor in a land which more times than not, has disagreed with European trade policies and agreements.

China is a tough market to crack for other brands as well :

Ford :

Ford has two significant challenges, one short term and one long term. Right now, they're beset by aging product, and new models won't start to arrive until the fourth quarter [of 2018]. Ford is also light on emotional connection to Chinese buyers. It's at risk of losing sales to much-improved Chinese cars and SUVs.

Ford is at a tough point in its product cycle. Most of its core products are a few years old. That's more of a problem in China than in most markets, where things seem to move very quickly because there are so many competitors.

In addition to the latest models from just about all of the global automakers, Chinese car buyers can choose vehicles from a slew of domestic Chinese automakers that (mostly) aren't yet well-known elsewhere, and that have a big incentive to undercut the global brands to build credibility and market share.

[2]

Honda:

The quality issue Honda has been dealing with in China since the outset of this year is a cold-climate engine problem caused by an unusual amount of un-combusted petrol collecting in the engine’s lubricant oil pan.

Honda in early March decided to halt new sales of its CR-V and noted the company might have to do the same with the Civic after a Chinese quality watchdog rejected the automaker’s plan to recall 350,000 of the cars to fix the problem.The CR-V sales termination began in early March and lasted throughout the month.Sales of the compact SUV in March totaled just 916 vehicles, compared with the 14,360 Honda sold a year earlier.Honda did not stop selling the Civic in early March, but its volume also fell sharply – down 16.5 percent to 13,586 vehicles.

[3]

GM, VW and indigenous brands will rule the roost in China, don't see that changing too soon.

[1]

[2]

[3]

[libranof1987]

Interesting perspective, isn't it. A manufacturer with 50% market share in one of the strongest growing car markets in the world has exited two of the largest car markets.

Too much in one basket. Luckily for them, India isn't exactly serious about EVs just yet: neither from a customer preference, nor regulation standpoint.

Originally Posted by AMG Power

In China, customers are increasingly demanding luxury models and larger vehicles. Another hindrance in growth Suzuki may have to contend with is the country’s law that pushes automakers to produce more and more New Energy Vehicles (PHEVs, BEVs and FCEVs).

Ah, is this the chink in Suzuki's armor. They will be relying heavily on this to work:

http://www.team-bhp.com/forum/indian...-2020-a-2.html

[SmartCat]

Originally Posted by dark.knight

The main problem with Suzuki is that they never were too big in R&D, model portfolio planning and upgrading. Sure, the Maruti/Suzuki fans in India can say that they brought in the Baleno as a large hatch, but it was nearly a decade after the S-RV, Fabia and i20

There was never a need for Maruti (with 50% market share) to take risks and bring in disruptive products. Whether it is sub 4m sedan or sub 4m SUV or premium hatchback or hatchbacks that look like SUV, it has always been new entrants or bit players who spent cash on R&D, took risks and introduced them into the market. Because that's one way of quickly gaining market share and generating more sales.

Only after that, Maruti walks in with a so-so product (I mean, gets the basics right) and takes away lion's share of sales in that new sub-segment. Anyway, there is no concept of "first mover advantage" when it comes to consumer facing products. Examples:

1) Orkut came first but Facebook prevailed
2) Palm came first but Apple prevailed

I can say with almost 100% certainty that Maruti will not join the EV bandwagon - not aggressively anyway. My prediction is that they will let Tata, Mahindra etc take risks and develop the EV market. They will walk in later.

[GTO]

Suzuki is a small mosquito at the global level. It never made competent big cars unlike say Hyundai which learned the ropes and today builds the Elantra, Sonata, Santa Fe etc. Suzuki's focus has primarily been cheap small cars. No wonder it exited the USA which is a big car market; Suzuki doesn't have the money nor the expertise to develop an Accord / Camry / CR-V / Highlander competitor.

China is also a developed market with big demands. Suzuki can't compete with Chinese giants on one hand and MNC biggies on the other.

Fact is, other than India & Japan, Suzuki is a nobody pretty much everywhere else.

Originally Posted by AMG Power

Another hindrance in growth Suzuki may have to contend with is the country’s law that pushes automakers to produce more and more New Energy Vehicles (PHEVs, BEVs and FCEVs).

Now, here's the thing. Toyota will allow Suzuki to use its hybrid / EV / fuel-cell tech in India, but not in all markets across the world.

[Starfire]

Half the global sales of Suzuki are from India yet they simply refused to bring the Swift Sport to India till date since so long or even the Vitara S with the beautiful 1.4 boosterjet engine which would bring together an all new "Hot SUV" segment in India (attaching below), similar to when the Palio 1.6 started the "Hot hatch" segment which was just blow out of proportion by the Polo GT TSI.

Either Suzuki just loves taking India for granted or enjoy's seeing it get the step motherly treatment (a part of family but still an outcaste).

Well Suzuki that's what you get when you ignore a country that gives you half your bread and butter. A Goodbye from China and a cut throat competition from Hyundai back in India.

[benbsb29]

Originally Posted by dark.knight

China may be the land of the rising sun, but often nothing other than that rises out of China, save for home-grown brands which also pay tribute to global brands.

Not that i intend to nitpick, but the 'Land of the rising sun' is Japan, and not China. Rest of your points are valid.

[AMG Power]

Originally Posted by GTO

It never made competent big cars..

Suzuki had a few products which were very competent, not small, developed in house but somehow didn't succeed - the Grand Vitara XL-7, Kizashi and the Grand Vitara.

The XL-7 was the largest automobile built by Suzuki. The first version of the XL-7 was developed in Japan on a completely new platform. It sold reasonably well until from 1998 to 2009 - almost 100,000 units a year and even won the "Best Buy" award. But in 2009 when Suzuki decided to go for the next model they chose the GMT 193 platform of General Motors along with GM's 3.6 litre N36A engine for the XL-7. This however was not as well built as the original XL-7 and didn't meet with as much success either. This was the beginning of the slide.

The Kizashi was very well built and extremely competent. It handled as well if not better than a C Class and it was only the E90 that was probably better in handling. The Kizashi was launched when Suzuki was in discussions with VW to share engines and cars. If that collaboration took off and they had access to the 1.8 T engine the Kizashi would have put even the Laura in the shade. That collaboration didn't take off either. Suzuki also had a proposal to use GM's 3.6 litre engine for the Kizashi as the chassis was strong enough to take even that. But by the time the slide had started and that initiative didn't see the light of day either.

The Grand Vitara sold in EU though small by US standards is the third of Suzuki's well built cars. It is still in production. As far as the US market was concerned, the size was probably just not adequate and the reason why this car didn't take off in that market. The Grand Vitara is now sold in the EU with 2.4 VVT and 1.6 VVT engines.

Suzuki also sold a badge engineered version of GM's Optra in the US which didn't take off either.

Brand equity more than competency of its cars was probably the reason for the decline. Suzuki spent a lot of time building low cost small cars that it's name was AND IS associated with cheap cars.

If R&D were as important as made out to be Maruti shouldn't have more than 50% market share in India without a single world class product. More important than R&D is to get your strategy right - in the Indian context read that as not necessarily well built yet having value in areas where it matters. Maruti compensated for the sub standard nature of its product mix with service quality, trust and reliability that was amongst the best in the Indian market.

All car markets evolve and move up the value chain - one reason why the Alto doesn't currently sell as much as the D'zire.

Suzuki will continue to tap the Indian market until it matures beyond its product mix. By then, the IC engine may have given way to EV's and the game would have changed.

Will Suzuki survive?

That's a difficult one but it's alliance with Toyota is just the first of its survival initiatives. We should see more.

Desperate situations call for desperate measures.

[ksameer1234]

Originally Posted by AMG Power

All car markets evolve and move up the value chain - one reason why the Alto doesn't currently sell as much as the D'zire.

Suzuki will continue to tap the Indian market until it matures beyond its product mix.

This I believe is the biggest risk for Suzuki in India. Without global presence they don't have products from mature to bring in when Indian consumer matures. Maruti Suzuki has successfully managed to cater to Alto / WagonR / Swift owners through Dzire / Ciaz / S-Cross but where do these customers go 5 years down the line? A Dzire owner will probably want to upgrade to something better than Ciaz or S-Cross and Suzuki may find itself without any offering.



Or may be this will pan out like two-wheeler market. Hero Splendor and Activa owners buy another Splendor and Activa respectively every 5-10 years without a thought. Bajaj thought it will provide 125cc bikes for customers wanting something more after 100cc experience and the whole strategy fell flat on its face.

[Punatic]

Originally Posted by AMG Power

Suzuki quit the US sometime back and now its quitting China. The excuse is that it wants to focus on India. Do you believe that?

Here's a believable explanation that makes some sense (source: livemint):

“The objective of automotive business is not what it used to be 10 years ago, which is to make money. It has now moved towards survival,” said Deepesh Rathore, the London-based co-founder of Emerging Markets Automotive Advisors, referring to newer technologies such as autonomous cars and electric vehicles. “Those who do not have deep pockets to spend on technology will look to protect their turf,” Rathore said. “In other words, they will consolidate.”

[ajmat]

What we are seeing is the beginning of some unofficial oligopolies based on region. Note the following: (This is my opinion)

GM - Pulled out of Europe - focussing on US and China
Ford - Focussing on US and Europe - luke warm in China and India
VW - China, South America and Europe - Luke warm in US - Too much investment to pull out
Nissan, Toyota, Hyundai, Kia - Only true strong global players. Toyota is a little weak in Europe though.
Renault- Nissan Rebel Alliance - Strong everywhere as a whole but weak in parts - Renault/Dacia strong in Europe. Nissan strong elsewhere
BMW / Mercedes - Very strong in Europe, US and China - presence elsewhere
PSA/Opel - Strong in Europe and presence in China
Suzuki - India and Europe
Volvo - Europe and China
FCA - weak everywhere but Italy and US

It is an art to be big, everywhere and profitable
If you cannot - focus on your key markets but be aware of your risks

Similarly - Uber is pulling out of S.E. Asia to focus on US and Europe

[volkman10]

Suzuki ends JV with Changan, exits China , however Suzuki will continue licensing of production and sales of Suzuki models to Changan Suzuki.

Comment by Suzuki’s Chairman Osamu Suzuki:
“Approximately 25 years ago, we launched the Alto in China, and since then we have made efforts in cultivating the Chinese market. However, due partly to shifting of Chinese market to larger vehicles, we have decided to transfer all equity to Changan Automobile.