Suzuki (And VW?) Wants Bigger Footprint In India
India is going to be an economic powerhouse, just like China. With 1.1 billion people, that’s a lot of potential customers for your goods. Suzuki knew this, which is why they pushed hard in India. Suzuki is the undisputed market leader in India. Whenever there are developments in that market, we should probably listen. Listen up:
The Economic Times of India reports that Suzuki has increased their stake in Maruti Suzuki to 55 percent. This has triggered speculation that Suzuki may launch a takeover for its Indian subsidiary. The speculation is not unfounded. Under Indian law, any stake over 55 percent will require you to make an open offer for another 20 percent.
It’s not difficult to see why Suzuki wants to have a higher stake in their Indian joint venture. It contributes 80 percent to Suzuki’s profits, superseding the profits made in Japan. No doubt Volkswagen will like the idea of Suzuki slowly taking over their most profitable division. Auto analysts seemed to agree that this is the start of a takeover. “It would be interesting to see what plans Suzuki and VW have for Maruti,” mused an analyst at a Mumbai-based brokerage. “Suzuki gets nothing by upping its stake unless it has a longer term strategy of which this is a part.”. Maruti declined to comment on this development (even their website didn’t mention Suzuki’s increased stake). I suppose losing further control of your most prized possession does hurt one’s pride.
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Indian public buy Maruthis buy truckloads for reliability, low-cost of ownership and after sales-service. VWs are 'famous' for the very same aspects. They already concerned about the impact of VW partnership will have on their beloved Maruthi. Good news spreads fast.