Akio Toyoda and O Suzuki meet PM Narendra Modi

In what can be seen to be a significant meeting of global automobile industry heads with the Indian government, Akio Toyoda, president of Toyota Motor Corporation, and O Suzuki, chairman of Suzuki Motor Corporation, called on prime minister Narendra Modi today.

The meeting comes just about five months after the two Japanese carmakers first announced that they were exploring a business alliance for collaboration, with the conviction that it will help both companies solve their respective challenges.

At today's meeting, the Toyota-Suzuki business partnership, and future technological developments came up for discussion. The partnership is expected to bring together Toyota’s global leadership in technology and manufacturing, with Suzuki’s strength in manufacture of small cars, especially in India. It is expected to enable India to use new technological developments. Further, high volumes will enable local manufacture of components required for these technologies. 

The partnership will also promote Make in India, and contribute to employment generation. It also opens up scope for export of new technology cars from India.

Likely gains of partnership in India
For the last few years, the global automotive industry has been witness to a number of strategic alliances being forged between Daimler, Renault and Nissan as well as Nissan and Mitsubishi. A partnership, particularly in India, will be a win-win situation for both companies.

In fact, only yesterday, Tata Motors and Volkswagen have inked an MoU for joint collaboration in the India market.

Key implications from Toyota’s perspective will be gaining access to Suzuki’s biggest market – India. In addition, the carmaker can tap into the network and dealerships of Suzuki in the country through Maruti Suzuki, a well-entrenched player in the local market (with a 47% market share in passenger vehicles) as well as garnering knowhow behind the small affordable car, which is Suzuki’s USP in India.

Toyota, through its Bangalore-based joint venture company Toyota Kirloskar Motors, has not really been able to penetrate the Indian market with its existing models. Toyota recently bought over small car specialist Daihatsu and is likely to kick off its small-car assault in India in 2018. The proposed Toyota-Suzuki alliance  could well accelerate the introduction of the small car brand by leveraging Suzuki’s expertise in this domain.

From Suzuki’s perspective, it has limited capability in developing hybrid and electric powertrains while Toyota is well known for its alternative fuel technologies especially with its eco-friendly hybrids – the Prius, Camry and the Corolla. By partnering Toyota, Suzuki gains access to this technology that will help it expand its product portfolio in areas where it did not have prior expertise. Globally, Toyota has a better brand image (it was recently pegged at No. 5 of 2016's best 100 global brands) while Suzuki is known more for its small car platforms, which translates into a good fit.

Tech and R&D
Furthermore, this likely collaboration will cover R&D in advanced technologies and products and could come at a more opportune moment with BS-VI emission regulations to come into force in 2020 in India along with fuel economy legislation in 2021-22. By October 2017-18, safety norms will also be in place in the country; the alliance is exploring partnership in advanced technologies in environment, information technology and safety where Suzuki will gain from Toyota’s association.

Despite a common development programme, both companies would have differentiated features in their cars but will share technologies and could have common components like engines and gearboxes that would enable both to price their products aggressively much on the lines of Renault-Nissan.