Maruti SuzukiNSE 0.81 % accounted for more than half the vehicle sales for Japanese parent Suzuki Motor in 2017, a year when Hyundai Motor’s Indian unit helped lessen the pain from falling numbers at the Korean company. With India among a few countries where vehicle sales grew at a healthy pace, the past year saw the nation’s increasing profile as a key automobile market. In the two-wheeler space, Honda Motor and Suzuki had their highest revenue contributions from India
These companies have made their Indian units into money-spinning operations by developing products that are specifically targeted at the Indian buyer. European and US automakers, as well as some Asian manufacturers, had suffered here as they didn’t have products suited for the local buyer. But that is changing now, with companies such as Ford Motor, Renault and Volkswagen also developing vehicles for India.
The significance of India to the automotive industry is evident also from the seriousness with which it is responding to the government’s call to switch to electric mobility by 2030. Some four dozen companies working on electric vehicle technologies are participating in the Auto Expo starting in Greater Noida this week. Several of these technologies are being developed with the focus on the main selling factor in India: affordability.
Suzuki is in the forefront also to bring electric vehicles to India, even as it strengthened its leadership in the local market. Its unit, India market leader Maruti Suzuki, accounted for more than 52% of the Japanese parent’s sales volume in 2017. The volume share has grown more than five percentage points in two years, even as it sold over 1.7 million vehicles in India in 2017, compared with 1.4 million in 2015.
“Suzuki has been making investments in capacity, being future-ready,” Maruti Suzuki chairman RC Bhargava told ET in a recent interaction. “India is an important market for them. If the Indian market continues to grow (and) Maruti Suzuki manages to continue increasing its market share, sales contribution from India (for Suzuki) will go up even further in the years ahead,” he said.
For Hyundai, 2017 was the third consecutive year when global sales registered a decline, hit by weak China and US performance. But India provided a cushion, with sales increasing 5.4% to an all-time high of 527,000 units. In a year when Hyundai manufactured 678,000 vehicles — including those exported — at its factory near Chennai, the share of India in its global sales volume moved higher to 15%, from 13% in 2015. For Hyundai, India is the third biggest market — in terms of sales, it is bigger than the entire Europe — and the second largest production base outside South Korea
The company has plans to invest $1 billion in India over the next few years, Hyundai Motor India managing director YK Koo said. Most of this investment will be to increase sales to a million-unit-mark. To achieve that, it plans to launch two volume vehicles: a small car and a compact SUV.
The contribution of India to the global sales of these automakers is set to grow. Maruti Suzuki has said that it was on course to achieve India sales of 2 million units ahead of the 2020 target. Hyundai is expected to hit the million mark by 2020-2021.
Beyond Maruti and Hyundai, India is joint No. 1 in the Asia Pacific region for Honda in car sales. For US carmaker Ford, India is the second largest manufacturing base in Asia.
With 100,000-unit annual volumes, India already figures among the top 10 markets for France’s Renault. Earlier in the year, the shares of Suzuki Motor was re-rated higher because of outperformance of Indian manufacturing base. Strong demand for scooters had led to a re-rating of Honda.
For Honda Motorcycle, India has outgrown Indonesia and China to become the largest market globally. The Indian two-wheeler entity of Honda Motor sold half a million units in the first 10 months of this f inancial year, growing at 20% compared with the market growth of 12%. People in the know of the company’s plans say if not for the shortage in capacity, the company would have grown even faster.
India accounted for as much as 31% of its global two-wheeler sales in the first nine months of fiscal 2018, compared with 28% in the financial year ended on March 31, 2017. Just like Maruti Suzuki in cars, Suzuki Motorcycle & Scooter India is the largest two-wheeler unit of Suzuki Motor, accounting for a third of its global sales in the segment.
Suzuki Motorcycle managing director Satoshi Uchida said India still has a lot of growth-potential.
“For SMC, Suzuki Motorcycle India is strategically important and we commit ourselves to its growth by investing a big portion of our business resources. We now make in India, not only for Indian customers but also for exports,” Uchida said. “Motorcycles made in India are exported to many countries including Japan. We wil l cont inue to strengthen our presence in India.”