Ertiga success in Indonesia fuels Maruti Suzuki's plan to export WagonR

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The Indonesian car market, which touched an all-time high of 1.12 million units in 2012, is significant for Maruti at a time when sales in India are sluggish. Reuters The Indonesian car market, which touched an all-time high of 1.12 million units in 2012, is significant for Maruti at a time when sales in India are sluggish. Reuters
SummaryEncouraged by the strong success of India-made Ertiga in Indonesian market, Maruti Suzuki will start exports of the WagonR.

and Estilo models a year to Indonesia. In fact, Maruti also supplies Ertiga CKD kits to Mazda, which re-badges it and sells it as the Mazda VX-1 in the Indonesian market.

With Maruti's domestic production capacity expected to touch about 2 million units a year by 2016 and parent Suzuki giving the company a mandate to focus on emerging markets like Africa and south-east Asia, the company has become much more aggressive about exports to growing markets like Indonesia. What works in Maruti's favour is that import duties in Indonesia for cars imported from India is expected to fall to 5% by 2020 from 20% today under a bilateral trade agreement that looks to progressively lower tariff barriers. Incidentally, Suzuki is also investing a 60 billion Yen on a car plant in Indonesia that will later locally manufacture cars like the WagonR.

Puneet Gupta, principal analyst at IHS Automotive India said while a focus on exports to south-east Asia is necessary for most domestic carmakers, for Maruti it is even more important given the huge production capacities it has today. “It is a very significant move, and Indonesia is a market with similar demographics and vehicle penetration levels like India, so products that work here, will likely work there as well. I believe the small car they launch next year will be exported to these markets from India as well,” he said.

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