Investment in EVs

Several media including Reuters reported that Suzuki Motor is planning to invest about $1.37 billion in its India factory. Of course, the purpose of this investment is to produce electric vehicles (EVs) and batteries.

However, it will be the first major EV for Maruti Suzuki in India, in fact. Suzuki, a Japanese multinational automotive manufacturer, tries to align with a national strategy. It means that the Japanese company will reduce oil dependence and air pollution in major cities.

On the other hand, Japanese Prime Minister, Fumio Kishida, visited his Indian counterpart, Narendra Modi. They announced that the Japanese government will invest $42 billion in India over the next five years.

The company announced that Suzuki Motor Gujarat Private will invest 31 billion rupees by 2025 for battery EV manufacturing. Also, it will invest 73 billion rupees for construction of plant vehicle batteries. Suzuki Motor president Toshihiro Suzuki mentioned in the following

“Suzuki’s future mission is to achieve carbon neutrality with small cars.”

Big decision

This announcement is a big decision for the Japanese automotive manufacturer, Suzuki. This is because it is one of the major Japanese automotive makers that have not unveiled their EV plan yet. Suzuki is very famous for its high-quality small cars, but small size does not suit for EVs. EVs need lots of their batteries and they account for a large part of EV’s internal volume. Therefore, Suzuki is afraid of losing its competitive edge by manufacturing EVs.

However, this decision is unavoidable at the same time. The reason is the Indian market. First of all, the Indian government wants to accelerate electrification in the Indian automotive market. For example, it tries to realize the fact that 30% of new car sales there will be EVs by 2030.

Of course, this number is still ambitious because the average income in India is low. Also, there are fewer charging stations there compared to advanced countries. Thus, main customers to buy EVs in India are wealthy people.

However, Suzuki earn about 30% of operating profit in the Asian area including India. In fact, the company entered the Indian market in 1982. Therefore, it seems unavoidable for the company to adapt a new situation to keep its business there.

Indian market

Many experts think and say that the next Chinese market is India. It is true that India is the largest democratic country in the world and its population will surpass China by 2030. Therefore, it seems that big companies try to enter the Indian market to find next frontier. However, the reality is different.

In fact, Ford announced the US automotive maker withdrew the Indian market in 2021. Ford’s longtime rival, General Motors, had already withdrawn there. Therefore, there are more difficult factors to make businesses successful than our thoughts such as population, democracy, English speaking and others.

Even in this tough market, Maruti Suzuki has established its strong presence there. In fact, it has a roughly 48 per cent share in the Indian market. In addition, Hyundai India has around 17 per cent as well.

Therefore, Suzuki must keep its presence in the Indian market. That is why the Japanese company finally made decision to invest in EVs.