Suzuki is expected to shift its entire export business from Japan to the Indian subcontinent by the end of next financial year. Suzuki has been operating in various global markets depending on the territorial factors. However, all of the overseas marketing divisions will now be based out of India while the headquarters will be located at New Delhi. The entire shifting operation is expected to be complete by the end of the financial year 2015 and the new export headquarters will be answerable to Maruti Suzuki even though Suzuki owns a majority 56 percent in the Maruti Suzuki alliance.
The reason for this shift in export base from Japan to India is due to the increasing salaries and an ageing population that is forcing Japan to lose out on its cost competitiveness. However, it comes as a major relief to the automakers that the demand for automobiles in emerging markets is steadily increasing even as big markets such as the USA and Europe have shown declined growth. Many other global automakers including Ford, Hyundai and Nissan-Renault have heightened the manufacturing and export operations in India as input costs in their domestic countries have skyrocketed. The fact that the rupee’s value against the dollar has depreciated makes a strong case for the boost in exports from India.
Cost is an important factor when it comes to exploring growth avenues in the overseas markets. However, Suzuki has operated in India for long enough as a strong contender to set up its export base in the country. The country is also located strategically in terms of geography. Suzuki is expected to do well in other global emerging markets with its expertise. Maruti currently exports 10 percent of its production capacity. It intends to increase exports to 15 percent in the short term and to around 25 percent in the long term. Maruti contributes nearly 40 percent of the parent company’s gross profit.
Suzuki has created two international marketing teams. One of them will cater to the markets in Latin America, South-East Asia, Oceanian countries and Europe while the other team will look after the Middle East and North American markets. Suzuki is by no means a big carmaker in comparison with other global automakers. Bikes are known to be Suzuki’s forte. If the company wants to make it big, it has to tap the raw potential in emerging markets and ensure greater community outreach in various markets.
Source – Livemint