Maruti Suzuki motor corp. and Toyota motor corp. have signed a deal according to which Maruti Suzuki is going to provide its 2 best selling premium cars to Toyota namely Baleno and Brezza.
Yes, you read it right. Baleno and Brezza together account for more than 51% of Maruti’s sales today and now the company has decided to provide 25-30% of the manufactured units to Toyota which will then be sold under Toyota badging. It is expected that Maruti Suzuki shall gain the brand loyalty of the other brand as well and the number of units sold might also increase.
But that’s not all. Toyota, in return, shall provide Suzuki with tech related to Electronic Vehicles (EV) and their premium sedan Corolla. It will be amazing to see car like Corolla selling under Suzuki branding. The deal is going to be very beneficial for Suzuki motors as they lack proficiency in EV.
The main reason behind this deal is that it has become difficult for the foreign brands like Toyota, Ford, Volkswagen etc. to survive in India, the 4th largest car market globally. Maruti Suzuki has a market share of 51% in the country. So it was a smart move on Toyota’s behalf to join hands with a big Indian car brand. Toyota has already released the teaser of its own version of Baleno called Glanza that is going to launch in few weeks from now and shares the similar specifications and engine as Baleno. These 2 cars should increase the sales of Toyota in India and capturing better portion of the market.
The questions that still remain are:-
Why would anyone buy the same car from Toyota at a little higher price and less number of service centres availability?
How will this deal impact the profits of Maruti Suzuki? Can it prove out to be more profitable?
Will audience accept Corolla with Suzuki logo keeping in mind that it is already a flop in the market?
Can Maruti capture a bigger segment the market after the deal?
And finally, when can we see EVs or hybrid vehicles from any of the 2 brands?
It is going to be profitable for carmakers who are not doing great in Indian market to join hands with those who have a good knowledge of the Indian customers and what they want. Ford and Mahindra are also expected to form a new join-venture brand in next 90 days where both of them will develop totally new vehicles and target Indian psychology more effectively. But will these partnerships be an overall success? We have seen JVs before that failed miserably. Or they might turn out to be life saver and brands like Chevrolet should have tried the same before completely exiting the Indian market.