Toyota Motor and Suzuki Motor on Thursday announced a cross-badging agreement under which the Japanese automobile majors will manufacture vehicles for each other in the Indian market.
Suzuki will supply premium hatchback Baleno and compact sports utility vehicle Vitara Brezza to Toyota, which will sell those under its own brand through its subsidiary in India. Toyota will supply its executive sedan, Corolla, to Suzuki to be sold through local unit Maruti Suzuki, reported Economic Times.
The deal allows both companies to address certain segments of the market where they have no or insignificant presence in India as well as run their factories at better utilisation rates. The two will also start joint sourcing for these vehicles, which will allow them to reduce cost. The pact may be expanded to hybrid vehicles as well.
The pact concluded on Thursday is the continuation of a MoU signed in February last year to collaborate in areas including environmental technology, safety technology, information technology, and the mutual supply of products and components. In November 2017, Suzuki and Toyota had finalised an agreement to introduce electric vehicles in India around 2020.
ET reported that on Thursday, the companies said they would decide on the details of each model — such as the schedule of supply, number of vehicles to be supplied, specifications and pricing — at a later stage. A person close to the development said supplies under the agreement would commence only in 2019.
This would help drive up volumes. “The effort will also be to increase localisation content in models covered in the agreement, this would in turn give a fillip to the domestic component industry,” he added. “By competing with the goal of mutual improvement, Toyota and Suzuki aim to invigorate the Indian automotive market to enhance their products and services,” Toyota and Suzuki said in their joint statement.
