Suzuki May Not Invest on Developing the JV in China

Gasgoo (Shanghai, October 31)— Reportedly, Changan Suzuki, a JV automaker in China, has recently announced adjustment on company structure, to remove its R&D Office which will be merged into the Quality Control Office. More information on the adjustment may be released in the following days.

Decision to remove the R&D Office has caused resignation of some employees including middle managements, which may influence introduction of new products and R&D, according to insiders.

Moreover, as insiders predict, Suzuki may not invest in the joint venture in China after 2018. And staff working in China may be retreated after 2020. After the contract expires in 2023, no more cooperation will continue between the two companies. 

Now Changan has tried to make sure that the ongoing investment can make profit. However, Changan hasn’t been optimistic about the cooperation later on, considering the fact that the joint venture has made little contribution to revenue of Changan.

Look back on 2012 when Suzuki retreated from the American market, some analysts had pointed out that this Japanese automaker might also lose its market shares in the Chinese market.

Targeting at the segment of middle cars has turned out to be failure for Changan Suzuki.  Net profit of the company was 1.83 million RMB in the first half of 2016 while sales have been 82 thousand units in the first nine months with a yearly decrease of 7.2%. But the target volume of the company is 168 thousand units in 2016, only 50% of which has been completed by now.

Changan Suzuki has allegedly centered on building brands. Though, whether the adjustment can work remains to see.