MUMBAI: German carmaker Volkswagen (VW) may extend its global partnership with Suzuki in India by tapping the manufacturing and design facilities of Maruti-Suzuki in India. Top officials of VW visited the Maruti-Suzuki factory and met senior management of the country’s largest carmaker where discussions centred around sharing product designing or rebadging cars.
Both automakers are likely to work together at Maruti-Suzuki’s new plant at Manesar. VW intends to use this production facility to raise its presence and marketshare in India. VW and Suzuki are jointly developing a small car, which will be produced at the new plant, a crucial small car market for both the companies, said two people familiar with the development.
Volkswagen India chief Mueller has gone on record to say that the company is looking at capturing an 8% market share in the next 3-4 years when the Indian car market is expected to reach 3 million. It translates to around 2.5 lakh cars per annum while VW's total capacity stands at only 1.1 lakh. It will take another 2-3 years to harness the entire installed capacity and VW is looking at getting the numbers from Maruti, said a person close to the development.
When contacted Maruti-Suzuki chairman RC Bhargava said: "The decision for any tie-up with Volkswagen would be taken by Suzuki Motor Corp and Maruti has no role in that. Any relationship would be guided by the parent company and the new capacities could well be taken up by the local demand which we are struggling to meet."
Suzuki chief Osamu Suzuki had earlier said that they are looking at designing of components to start with but remained silent when asked how the partnership would grow.
VW and Maruti-Suzuki are also looking at contract manufacturing relationships like the one that Maruti currently shares with Nissan. Under the agreement, up for renewal this year, Nissan sources Maruti’s A-Star small car from its Manesar factory and sells them as Nissan Pixo in Europe. In December 2009, VW, Europe’s largest carmaker, agreed to buy a 19.9% stake in Maruti Suzuki’s Japanese parent for $2.5 billion, which could boost the German company’s fortune in India and open up millions of dollars of business opportunities for auto parts suppliers.
Maruti Suzuki, proposed sixth plant, with a total investment of Rs 1,925 crore, will help the firm produce an additional 2.5 lakh cars by 2013, taking the total capacity to 17.5 lakh. It plans to sell over 15 lakh cars in India besides exporting 15% of what it produces by 2015. Indian car sales are expected to double to over 30 lakh units in five years, as per the Society of Indian Automobile Manufacturers.
