Suzuki to make India production hub

Suzuki Motor Corp will make India a production hub and build a new “world car” in the country, its chief executive said on Tuesday, underlining the importance of the fast-growing market to the company.

Maruti Suzuki India Ltd , in which Suzuki owns 54.2 percent, will make the car that will be sold globally, Osamu Suzuki said at an industry conference, without giving details.

Suzuki is scheduled to speak later in the day at a Maruti Suzuki news conference. He will unveil plans for the new car then, said a senior company official, who asked not to be named.

The car is likely to be unveiled at the upcoming Auto Expo in New Delhi in January, analysts say.

Number two car maker in India Hyundai Motor Co recently launched the i10 first in India, where the small car is built.

Suzuki is beefing up its vehicle line-up and dealer network in India in a bid to retain its marketshare of at least 50 percent.

Maruti Suzuki for the first time sold more cars in India than its parent in Japan during the first half of the fiscal year, with models such as the Alto and Swift hatchback hooking buyers.

Maruti Suzuki, founded by Suzuki and the Indian government in 1982, has dominated the local small car segment with its fuel-efficient vehicles, and is now shifting customers to more premium vehicles, including the SX4 sedan and the Grand Vitara sport utility.

Maruti, which will have a capacity to make 1 million units by 2010/11, is investing $1.75 billion in research and development.

But competition is heating up with third-ranked Tata Motors Ltd  as well as global rivals including Toyota Motor Corp , Honda Motor Co and Volkswagen  all looking to make inroads.

It will also face a greater threat at the lower end from a $2,500 car that Tata Motors is scheduled to launch in 2008, and a $3,000 car that Renault aims to build with motorbike maker Bajaj Auto Ltd
Shares in Maruti, which has a market worth of $7.85 billion, were up 1.2 percent at 1,058 rupees at 0720 GMT. They trade at 16.3 times forecast earnings, compared to 16.7 times for top vehicle maker Tata Motors.

Source:reuters

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