3 years

Business

The Toyota-Suzuki Tango

Page 1 of 1

An alliance poised on a prophecy that could fail

FOR MUCH OF the world, a word for the inner whorl of a flower has come to convey a boxy contraption of metal on wheels. This is bizarre. But as the marketer of the planet’s most popular sedan ever, Corolla, Toyota would be proud to plead guilty for it. While it hasn’t quite been able to nudge Volkswagen aside as the globe’s top automaker, with even the Renault-Nissan-Mitsubishi combine having stolen ahead in 2017 (with 10.6 million vehicles sold), few doubt its determination to become No 1. This, after all, is the company that spelt doom for Detroit. From a global perspective, thus, it’s an odd sight indeed to have Toyota lean on Suzuki for a leg–or gear, rather—up in the Indian market. For observers closer home, however, it’s yet another story of a ‘think global’ MNC failing to ‘act local’. In an irredeemably status-driven country, it got the dynamics of this fuzzy motivator all wrong.

In itself, the deal that Toyota and Suzuki have struck in Tokyo for India is not tilted in favour of one company or the other. Both have proclaimed it as a ‘win-win’. As an extension of an R&D alliance forged last year, Suzuki gains access to Toyota’s wizardry with electric and driverless cars, which are expected to shape the market’s future, while Toyota gets instant market traction. The two will share factories and swap models, an arrangement that gives Toyota a chance to boost its local sales: even as its own plant supplies Maruti Suzuki with Corolla, it will sell the hybrid versions of Suzuki Baleno and Vitara Brezza under its own marque. For India’s market leader, which sells every second passenger four-wheeler here (it logged nearly 1.7 million in 2017), this isn’t much to part with. But for Toyota, which sells less than one-tenth of what Maruti Suzuki does, it could spell big volumes.

Toyota isn’t exactly an also- ran in India. Its Innova and Corolla models have done pretty well. But success in the bulk segments of the market has evaded it, with its cheaper offerings all but left in the dust by rivals. For a company of its clout and ego, this must’ve been hard to live down.

On the face of it, Toyota’s strategy to win volumes may not have been flawed either. It rolled out its compact sedan Etios just when such cars began to form the market’s bulge bracket, an upward shift led by Suzuki’s Dzire, a ‘Swift with a boot’ that became India’s default family car soon after its launch. Toyota’s Etios entered this action-packed arena at a slight premium over Suzuki’s bestseller, and since it was an authentic sedan, it could easily have swung Dzire’s upper-end buyer away. But for this to work, it would’ve had to appeal to a customer aspiring to a status symbol of a higher league altogether. Instead, Toyota chose to position this car as a workhorse, a rational mode of conveyance; and in spite of Virat Kohli being signed on for its ad campaign, whatever claim it had to sedan snobbery was lost with the launch of Liva, a bootless version.

All that, of course, is history now. This summer, Toyota expects to make up on the snazz factor with its higher-end sedan Yaris, designed to push up pulse rates and vroom into the fast lane alongside Honda City, Suzuki Ciaz and Hyundai Verna. While no one expects luxury levels of performance from a car priced under Rs 10 lakh, it’s here that Toyota needs a winner to signal its credentials as a car-maker to the rest of the market, the reason that Suzuki threw all it had at making a go of its Ciaz after its clunky SX4 flopped. This, again, is a function of the aspirational order that India’s market has come to assume. Partly as a result of the psychographic profile of the buyer that City, Ciaz and Verna aim for, the three sedans are seen as the preference set of the discerning yuppie. It’s in this arena that Toyota needs to earn its spurs.

Easier still would be for Toyota to buy Suzuki outright, an outcome analysts consider inevitable if the market were to undergo an upheaval in favour of electric cars under the command of computer networks. This is a prophecy that has the support of big investors, even policy wonks, but has not been cast in stone yet. Doubts persist over the planetary benefits of electric engines and the actual safety of centralised vehicular control. As the last century has shown, the centralisation of power rarely serves humanity well. And if naysayers win this argument, Suzuki might not need Toyota at all. It could retain its leadership in India the good old way: by staying in touch.

disqus