Little gas for Maruti in Toyota pact

Global auto giants Toyota and Suzuki on Thursday said they have signed an agreement to supply specific models, including hybrid vehicles, to each other in the Indian market. The vehicles will be sold by the respective Indian subsidiaries through their sales networks.Suzuki will supply Baleno and Vitara Brezza to Toyota, while Toyota will supply the Corolla model to Suzuki. Details on vehicle specifications and supply pricing will be iron out at a later stage.The two companies will enhance their efforts to procure components for these models locally. They will also continue to explore other collaborative projects.Speaking on the impact of the new collaboration, Basudeb Banerjee of Ambit Capital said, “This is the distribution agreement through the respective subsidiaries -- Maruti Suzuki and Toyota Kirloskar -- and could also include markets abroad.”63534538 “This could be a precursor to a possible acquisition of Suzuki by Toyota,” he added.Advantage ToyotaAlthough the deal looks like a simple marketing pact, it will give Toyota a new lease of life in India. Here is how:With Baleno and Vitara Brezza in its showrooms, Toyota dealerships will be able to garner better volumes, and, therefore, book better profitability.With Maruti’s nationwide showroom network, Toyota is likely to improve Corolla Altis’s volumes. ? Toyota is likely to go for more localisation for Corolla Altis, leading to a subsequent price reduction.No near-term benefits for Maruti With Corolla Altis, which costs Rs 15 lahk (ex-showroom Delhi), Maruti will be entering a higher price bracket. Till now, Ciaz S, at Rs 9 lakh, has been Maruti’s costliest brand. But this may be the only takeaway in Maruti’s favour.“In the near term, this (the pact) won’t push Maruti’s volumes given the low sales numbers of Corolla,” Banerjee said. But he said given the dealer reach of Nexa, it was unlikely for a customer to go to a Toyota dealer instead of Nexa.63534516 He also said Suzuki could benefit from hybrid and electric vehicle technology transfer from Toyota going forward but given adverse duty structure it won’t see high volumes in India.Given the high sales of Baleno and Brezza -- 15,888 and 12,114, respectively from March 2017 to February 2018 -- Toyota and its dealers will make good trading margins. Maruti, on the other hand, with a low Corolla Altis volume of 398 in the March-February period, will not make much in terms of marketing margins.

from The Economic Times https://ift.tt/2GkiPI8