Toyota and Suzuki sign mutual agreement to supply certain models in India

The India subsidiaries of Toyota Motor Corp and Suzuki Motor Corp will supply specific models including hybrids to each other based on the basic agreement of mutual supply, the two companies said in a joint statement on Thursday. The vehicles will be sold through the sales network of Maruti Suzuki India and Toyota Kirloskar Motor. With the move, the companies aim to further strengthen their position in a market that is touted to be the third largest globally by 2020.

“By challenging and competing with each other with the goal of mutual improvement, Toyota and Suzuki aim to invigorate the Indian automotive market to further enhance their respective products and services to be offered to customers,” the companies said.

As part of the agreement, Suzuki will supply the Baleno and Vitara Brezza models to Toyota, while Toyota will supply the Corolla to Suzuki. Details on each model, such as the schedule of the start of supply, number of supplied units, vehicle specifications, and supply pricing, will be considered at a later stage, the companies said.

According to Japanese news agency, Nikkei, Maruti Suzuki will supply Toyota with 30,000 to 50,000 units annually of its compact Baleno and Vitara sport utility vehicle while Toyota will provide Suzuki with around 10,000 units yearly of its Corolla in both hybrid and gasoline models. This mutual supply of vehicles will operate on an original equipment manufacturing basis.

For the aforementioned models, the two companies will step up efforts to procure components locally. Toyota and Suzuki said they “remain committed to the widespread acceptance and use of less fuel-consuming vehicles to help India reduce its environmental footprint and enhance energy security.”

While Suzuki Motor accounts for one in every two passenger vehicles sold in India, Toyota with a market share of 3.5 per cent has been a marginal player and is only present in the premium end of the market. To be sure, an intensifying competition, stricter regulations and an emphasis on green technologies by the Indian government is prompting global auto firms to collaborate and share costs.

Since February 6, 2017, when Toyota and Suzuki concluded a memorandum toward business partnership, the two companies have been exploring concrete projects for collaboration in areas including environmental technology, safety technology, information technology, and the mutual supply of products and components.

The November 2017 announcement of a memorandum of understanding between Toyota and Suzuki to consider a cooperative structure for introducing battery electric vehicles in the Indian market in around 2020 was one outcome of the joint exploration into the partnership. Today’s announcement is another outcome and underscores the progress Toyota and Suzuki have together made, and it aims to bolster both companies’ product line-ups and encourage competition in the Indian automotive market. The two companies, the statement added, will continue to explore other collaborative projects “that will contribute to the attainment of a sustainable mobile society in a manner that ensures fair and free competition,” the statement said.