Maruti to become Suzuki's export hub

Suzuki Motor Corporation is increasingly banking on its Indian operations for feeding the export market.

Addressing the media, Osamu Suzuki, chairman and chief executive officer, Suzuki Motor Corporation, said the company would manufacture vehicles in India and look at exporting them.

"We will earn foreign currency in dollar terms, and this can be said for new models as well," he said.

Suzuki was speaking to the media after addressing a session on his 24-year experience in India, at the India Japan Business Meet organised by the India Brand Equity Foundation, on the eve of the World Economic Forum's East Asia Summit 2006.

Suzuki has also entered into an agreement with Nissan for manufacturing compact cars at the Maruti Udyog plant in Manesar. The cars manufactured by Suzuki would be exported to the European market under the "Nissan" brand. The deal with Nissan would help Suzuki reap the benefits of economies of scale.

"Part costs are not going to reduce; therefore export volumes will have to be increased," he explained. Suzuki, however, refrained from giving any indication of the financial contours of the deal. He said the volumes had not yet been decided on and hence he could not comment on the investment in the project.

Earlier, addressing the summit, Suzuki said the size of the second facility in India would be two million sq m, and it would be completed by October 2007. It was also the site for the company's proposed diesel plant. The company would tread cautiously in the diesel project.

"This is the first time we will manufacture diesel and so we will go step by step," he said.

To start with, the company would manufacture 100,000 units, which could be increased to 200,000-300,000 units eventually. Suzuki declined to comment on the investment and said that apart from investment in machines, the project entailed investment in buildings and larger space for infrastructure.

The diesel project could go onstream by 2007.

When asked whether Suzuki Corporation was planning to buy out the Indian government's remaining 10 per cent stake in Maruti Udyog Limited, he said the company had no intentions of increasing its stake beyond the present level of 54 per cent.