Maruti Suzuki to help VW roll out sub-Rs 4 lakh car

Written by Ronojoy Banerjee | Ronojoy Banerjee | Rajat Guha | Rajat Guha | New Delhi | Updated: Sep 6 2010, 08:14am hrs
The global partnership forged between Japans Suzuki Motor Corp (SMC) and Germanys Volkswagen (VW) in December last year is now panning out in India. Industry sources said Maruti Suzuki India, which is majority-owned by SMC, would help VW develop an all-new small car, priced below Rs 4 lakh, and in return get expertise for manufacturing diesel engines from VW or directly sourcing engines from the German auto major.

VW currently has two budget modelsthe VW Polo (1.2 litre) with the base version priced at Rs 4.42 lakh and the Skoda Fabia (1.2 litre petrol), which sells for Rs 5.08 lakh.

The two companies had announced a global partnership in December which allowed Volkswagen a 19.9% stake in SMC. The two companies are keen to explore synergies in emerging markets, particularly India, and especially on the cost front.

Suzuki Motor chairman Osamu Suzuki, who is scheduled to visit India later this month, is likely to discuss various possible synergy options with Volkswagen officials. It is learnt that following his visit, the two companies will make at least three major announcements on joint product development, contract manufacturing and other important synergies.

India-specific plans will form a major part of the announcements. VW has already started work on developing a new small car that would be priced below to be positioned in the mass-market segment. It is in the development of this car that Maruti would come to its aid since the latters expertise in making compact cars is immense. Development of a cost-efficient small car for companies like VW is significant at this stage since the global market is shifting towards compact cars.

When contacted, a Maruti Suzuki spokesperson said, Specific plans are still being discussed by Suzuki Japan and Volkswagen Europe. However, nothing has been finalised yet. Volkswagen Indias communication head Kurt Rippholz also declined to comment on Suzuki-Volkswagen synergies.

Top Volkswagen executives had visited Marutis factories in Gurgaon in May this year and met its top brass to explore synergies. The companies are exploring synergies in areas such as product design and product testing, evaluation or part-designing of future models and special projects.

Suzuki is keen on getting VWs technology, particularly smaller diesel engines. Maruti will get access to Volkswagens diesel technology, which at present is the Indian auto majors weakness. Apart from access to diesel technology, Maruti will get more access to European market where the market is moving increasingly to cheap and energy efficient cars as reducing carbon emissions is the tall order of the day.