Japanese automaker Suzuki Motor plans to invest $1.23 billion in India for electric vehicles and their batteries in a bid to catch up with competitors.
Suzuki said on Sunday that it had signed a memorandum of understanding with the western state of Gujarat, an event attended by Indian Prime Minister Narendra Modi and his Japanese counterpart Fumio Kishida. “Suzuki’s future mission is to achieve carbon neutrality with small cars,” Suzuki president Toshihiro Suzuki said in a statement. “We will continue to actively invest in India to achieve India’s self-sufficiency.”
While the electric vehicle plant would be the Japanese company’s first in India, Suzuki is already in a race with local auto giants Tata Motors, billionaire Anand Mahindra’s conglomerate Mahindra & Mahindra, and TVS Motor, run by billionaire Venu. Srinivasan.
“Maruti Suzuki’s foray into electric vehicles will help it gain the trust of stakeholders and maintain market share,” says Soumen Mandal, an automotive analyst at Counterpoint Research, referring to Suzuki’s Indian subsidiary.
Suzuki risks “losing market share” in India to domestic peers and Korean billionaire Euisun Chung’s Hyundai Motor without an electric vehicle production plan, Mandal says. Tata has indicated it will invest $2 billion, Hyundai plans to spend $500 million and Mahindra & Mahindra intends to invest $400 million in the next few years, he notes.
Maruti Suzuki had a 44% share of the domestic passenger vehicle market in 2021, Counterpoint estimates. It has an “advantage” of economies of scale over its peers today, selling vehicles aimed at low, mid and premium categories, a price differential that helps it stay ahead of other brands, says Mandal. But he says Tata leads the electric passenger vehicle market, while Suzuki “has yet to enter the electric vehicle space.”
Suzuki, a 102-year-old automaker, will appeal to consumers because of its long-standing name in conventional motorcycles, says Song Seng Wun, a Singapore-based Asia economist at Malaysian bank CIMB’s private banking unit. “Their name has been associated with two-wheelers for so long that they are much more recognizable than anyone else,” says Song.
Foreign firms that are just “tapping into” the Indian market face complex rules and barriers, as well as a consumer preference for local brands, it adds.