Suzuki and Proton have recently struck a deal for developing and manufacturing small cars. This deal could benefit Maruti in a big way.
Carmakers across the globe are in a fix due to fluctuating sales and increasing competition. This has led them to look out for other options to grow and fully use the existing facilities. To do the same, Suzuki has tied up with Malaysian automaker Proton in order to supply CKD kits of small cars for sale in the Malaysian market. India is Suzuki’s biggest market and it rules in the hatchback segment by a huge margin. While domestic sales have been high, exports have been pretty dismal. But, the export numbers could change very soon as the Manesar plant of Maruti Suzuki might be used to build the CKD kits to be supplied to Proton.
Proton enjoys a healthy 17% market share in its home market where it sells various cars. Increasing traffic and the urge of customers to buy the first car has led to a surge in the demand of small cars. Developing a new car from ground up can be a very tedious task which has made the Malaysian carmaker tie-up with the Japanese hatchback expert. More details on the deal are awaited but from what’s known, the engine(s) to be used in the models built under the collaboration will be under the 1.0-litre mark to improve efficiency and to make the cars more affordable.
The first car to be launched under the partnership will be an A-segment car, a segment which Proton has never ventured into. There are chances that some of the existing Maruti models would be tweaked and exported and then sold under the Proton brand with a different name (remember the Nissan Pixo which was a rebadged A-Star). This would greatly reduce the R&D cost and the car could be launched as early as the beginning of 2016. Co-branding is also possible which will give Suzuki visibility in the Malaysian market. Proton’s Tanjung Malim plant will be used to assemble the CKD kits which will be imported thereby eliminating the time needed to build a new plant. All in all, the partnership will benefit both the parties involved and a few others in the process.
