More Indian Suzukis Down Under

The strength of the burgeoning Indian new car market could be a key factor that decides whether more Maruti-built Suzukis come Down Under. With the Indian home market set to finish the 2010 calendar year at close to double the growth rate initially estimated by Maruti-Suzuki in 2009 (around 30 per cent YOY) demand for production capacity is at a premium.

Maruti-Suzuki builds Alto for Australia and over 110 other markets worldwide. Its production portfolio includes Swift and SX4 as well a version of the Euro-focussed Splash. In 2012 it will add a new compact MPV to its production lines (see separate story).

But local demand for all of the established models and the expected take up of the new MPV and other updated models is so strong the company may put off plans to increase its export variants.

Last year Maruti-Suzuki exported around 147,000 cars. This year of that number is expected to increase only marginally to around 150,000. This is less than15 per cent of total projected 2010 production of over 1.0m cars.

By 2015 Maruti-Suzuki expects to build around 1.75m cars per annum. This figure is not, however, expected to match the growth in demand for its products as the Indian market is projected to soar to close to 5.0m vehicles.

Suzuki Australia chief Tak Hayasaki told the Carsales Network that the factors behind the decisions from where to source various new and existing models were complex. He stated that assuming sourcing from Maruti-Suzuki was a given because of lower production costs was "too simplistic".

"Alto is only built in India so that decision is simple, but where future models may come from, that is a harder decision," Hayasaki explained.

"Though there may be some production cost advantages, the cost of freight from India is higher and the time taken and flexibility [of shipping timetables] is also a consideration. And Indian domestic demand may also be problematic for export growth."

Hayasaki said that though Maruti-Suzuki could produce a version of Splash suitable for developed markets like Australia, demand from the Indian market may sway the decision.

This sentiment was backed up by Maruti-Suzuki international region sales and marketing exec, Rajesh Singh.

"We may be told [by Suzuki head office] to concentrate on our domestic market rather than work to increase exports. In the case of Ritz [the Indian market name for Splash], it might be that another plant would benefit from the volume [Australia might generate]. The demand from Europe is down so Magyar [Hungary] could be tasked to build them," Singh said.

Suzuki will commission a new production facility in Thailand in 2012. The Australian-Thai free trade agreement could complicate the issue of sourcing further, Hayasaki says.

"It might even come down to exchange rate. That could be the deciding factor," he said.

In the meantime local Suzuki boss Hayasaki says that his brand will increase Alto sales in 2011. He believes that annual sales of around 6000 units can rise to closer to five figures next year.

"There is strong activity in the [sub-light] segment from a growing number of manufacturers. We believe this [activity] is good for Alto. Suzuki is still a brand that people are getting to know in Australia."

And suggests Hayasaki, Indian-sourced vehicles could get a further boost from an unexpected sector -- Aussie farmers.

Following in the wheel tracks of their Kiwi equivalents, local farmers could soon be driving Sierra-based Maruti-Suzuki Gypsys on the land. Though not able to be complied for onroad use, the lightweight and capable turbodiesel four-wheel drives could be sold Down Under to take on side-by-side heavy duty ATVs from manufacturers like John Deere and Polaris.

Hayasaki says the company is currently exploring options to add the vehicle in both ute and wagon versions as a non-ADR 'industrial' model. Suzuki New Zealand has already imported a small number of the vehicles, he stated.

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