Suzuki Tries To Stay Ahead Of Indian Market
Suzuki is to India what Volkswagen was to China. Earliest foreign entry into a huge an untapped car market. Like Volkswagen in China, Suzuki built a dominant position in India early on. Suzuki owns half of the Indian market. Unlike Volkswagen, two-thirds of Suzuki’s operating profit is estimated to come from India. Volkswagen lost their commanding share of China (and made it up with volume) when the market exploded, attracted competition, and overwhelmed VW’s capacities. A mistake Suzuki seeks to avoid.
Currently capacity-constrained Suzuki will build a third auto assembly plant in Manesar, near New Delhi, reports The Nikkei [sub]. The plant will have an annual capacity of 250,000 vehicles, bringing Suzuki’s annual production capacity in India to 1.7m units. That’s more than the 1.43m units whole India bought in 2009, but you need to stay ahead of the curve.
Suzuki is currently building a 250,000 unit, set to start production in spring 2012, but that won’t be enough when it’s ready. The Indian car market grew 18.7 percent in 2009, when other markets collapsed. According to the Nikkei, the market is currently growing at a rate of around 30 percent a month. In August alone, Suzuki sold a record 105,000 vehicles in India.
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How can Suzuki be capacity constrained when they already have greater capacity than the total market? The math doesn't add up.
I enjoy working and living in India, once the Rubik's Cube of government, banking, society and general business is sorted, it is better than Communist China. But not as good as Thailand.