The chief executive officer of Japanese automaker Suzuki Motor Corp. on Thursday warned of a serious downside risk to the company’s Indian unit, Maruti Suzuki India Ltd, from a policy-induced push to electric vehicles (EVs) in the country.
“As the industry shifts towards EVs, when it comes to India, our volumes are so large that I worry that we could be caught flat-footed if there was a sudden shift towards electrification,” Toshihiro Suzuki, who is also a director on the board of India’s largest carmaker, said in Tokyo.
Suzuki’s comment signals that the Indian automobile market is likely to witness a wave of disruption as the government determinedly pushes environment-friendly alternatives to diesel- and petrol-fuelled vehicles. Implicitly, the company has also signalled its intent to undertake a course correction in its product strategy.
India has outlined an ambitious plan to move to an all-electric fleet by 2030, which will enable it to reduce its carbon footprint.
Suzuki Motor owns 56.2% of Maruti and generates the bulk of its revenue from the Indian partnership, which has a market value of around $30 billion, higher than Suzuki’s $20.5 billion. At the moment, Maruti lags local rivals such as Mahindra & Mahindra Ltd and Tata Motors Ltd, who have taken a lead in the EV space, largely due to their decade-old focus on such technologies.
A paucity of EV technology at Maruti, which is also one of the largest supplier of cars to the central and state governments and other agencies, was evident in October when the Indian government gave out contracts to Tata and Mahindra for 500 EVs of a total of 10,000 that it eventually plans to source; Maruti did not even participate in the bidding.
Maruti has been dependent on Suzuki for technologies ever since it formed the joint venture to sell cars in India in 1983 and that will continue (at least for newer technologies) even as its full-fledged research and development centre in Rohtak became functional earlier this year.
On Thursday, Maruti’s stock fell 0.24% to Rs8,215.30 while the BSE’s benchmark Sensex edged down 0.08% to 33,573.22 points, as reported by Livemint.
