Suzuki to make Splash in India but no sign of a $3,000 car

Posted by: Ian Rowley on December 12, 2007

Last week, I wrote a quick piece after Suzuki chairman Osamu Suzuki raised doubts over plans by both Tata and Carlos Ghosn’s Nissan-Renault alliance to make a $3,000 car for sale in the world’s second most populous country. It’s fair to say, Suzuki, the 77-year-old chairman of Suzuki Motor, isn’t a big fan of the idea. “There is a slight lack of clarity about this $3,000 figure. Does it refer to the actual retail price? Or does it refer to the cost of materials that are used in preparing this automobile? It’s not quite clear,” he said, before questioning what level of safety and emissions standards such a cheap car could achieve.

Yet none of that means Suzuki is going to stand by and let rivals eat into Suzuki’s 50% plus market share in India without a fight. Last night, the tireless Mr. Suzuki was in Delhi to announce two new cars which will be produced by the company’s Maruti Suzuki India subsidiary from next year.

One is the Splash diesel, which is already being built at the company’s Hungary plant for sale in Europe. It looks like a nice small car, but what it isn’t is Suzuki’s answer to Tata’s cheap number. In Britain, where cars admittedly often cost a lot more than many other markets, the Splash will go on sale in March with price tag of about $16,000. (For comparison, prices for the Toyota Yaris start from about $18,000). The Indian price isn’t yet known, but it’s safe to say Suzuki is will be looking to wealthier Indian car buyers with the Splash than its cheap car competitors.

The second new model sounds like more of the same. Currently a concept known as the A-Star, it will be another global small car, powered by a 1 liter, aluminum engine and compatible with Euro 5 emissions standards. Suzuki will produce 150,000 a year but export two-thirds of the total to Europe. If Suzuki is planning a truly cheap car for India, they’re keeping it very quiet.

Reader Comments

Harish

December 12, 2007 3:18 PM

Suzuki is involved in petty skirmishes and some foul mouthing…on the small car project. Well that’s always the case when an incumbent is sidelined.

Nick

December 12, 2007 10:23 PM

Might as well inscribe "Tata!" on your tombstone ahead of time if you're gonna drive a $3000 car. Sounds like a death trap. I could only imagine what kinds of commercials Suzuki could make with the brand name Tata.

Vikram

December 17, 2007 9:59 PM

Harish - what sidelining are you referring to?!

Indica & Sumo have done nothing but replaced Ambassadors & Fiats as the choice of cabmen. They are heavy steel deathtraps that I fear each time I drive on the highway or even take my dog for a walk in our neighborhood.

Which is the reason why they have hardly done any damage to Suzuki's numero uno position in India. Plus, if you haven't been reading the papers, Tata knows this very well, and the $3000 car will be retailed mainly in Tier 2 towns through truck/tractor dealerships. If they were so sure of coming out with a good product, they would have first launched in urban areas to take on the M800 & the Alto.

To top it all, the two firms are legions apart on the service front. Even new Tata customers hate their service levels, while people like me, who are on their 4th Maruti car (SX4 now), are treated like I am about to buy a new vehicle each time.

What the $3000 car will do is hit the mid-range motorcycle market to a small extent, and expand the market itself by introducing a new segment of customers

Manoj

December 18, 2007 1:26 AM

Vikram, did you never realize that you are among the rare breed of owners owning 5-lakh+ Marutis? Accept it, Maruti has been largely sidelined by the sophisticated customer. The ones stickig to Maruti & the ones making the 50% market share are the ones who are going for the cheaper models where Maruti undoubtedly provides value for money. The one-lakh rupee car would take out a majority of the small-car customers. Why do I suspect that the Maruti-800 car is being kept as an ace up Suzuki's sleeve, who's price maybe slashed at the opportune moment?

Samir

December 18, 2007 1:46 AM

An autorickshaw with 4 wheels would cost about $3000. If you have seen Tata's Magic, you know what to expect. A miniature version of Magic sans essential safety contraptions. I dont think Suzuki's market share would be dented. But it will surely dent the 2 wheeler market.

A J Balasubramanian

December 18, 2007 2:16 AM

No doubt TATA has really hard and built few variants of Cars suitable for Indian conditions and mindset. They have a long way to go. However, compare the advantages that Maruti Suzuki as a pet project during entry. They took advantage of this and worked sincerely and built a range of products which offer great value for money. All their products are highly reliable and has lowest cost of ownership for their features and performance. They also have excellent process for retaining their existing customers, by ensuring excellent service by feedback and follow-up. Their network is an advantage in this regard.

Particulalrly their vehicles like the Swift offer unmatched specification for their price. They are really great benchmark for Indian cars. Suzuki is aggressive and it is very difficult for others to dislodge them from their leadership position. Perhaps, Honda and Toyota enter these segments, we can see better competition.

However in Indian US$ 3000 car will be having its own market. Safe or not, there will be people to buy these products too. They will use them for commuting not like the SUVs.

Nickn

December 21, 2007 2:05 PM

This might be the prototype of Indian innovation of cheap and mass car @http://mistupid.com/pictures/page135.htm. In spite of India's primitive and backward image, Tata has a big dream of big league by owning Landrover. How low can British cars go now!

manbearpig

December 22, 2007 1:00 PM

Nick - families like the one in the picture is exactly the market segment that Tata Motors (and Renault) is targeting with their cheap car project. That is what thought leaders do. Find an underserved segment and add value there. Corus or Arcelor or Tetley or Daewoo are doing only better, not any worse, after an Indian takeover. I advise you to have an honest one-on-one with the Indian who has hurt you so bad, rather than venting your misguided frustrations by posting misinformed and malicious comments on blogs.
Start marinating your shoes now. You may have to eat them when the Tatas unveil their small car in January.

Nothing important

December 23, 2007 6:05 AM

Landrover and Jaguar were first bought by BMW in 1994, then sold to Ford, now Ford wants to give up. So my question here is if big brands like BMW and Ford cannot do much with Landrover and Jaguar then I wonder what the Indian TATA can do with it. I hope the Indians are not blindbly trying to emulate the Chinese with their MG buying.

Sanket Gandhi

December 24, 2007 10:40 AM

Hey Nothin Important;
You doubt what an Indian TATA can do with Landrover and Jaguar? It can and it wil do what the BMW and Ford couldnt do. They will turn around the loss into profits. I think you dont know the history of Ratan Tata; he has changed the entire loss making companies Tata Motors and Tata Steel and now Tata Steel took over Corus. Also Ratan Tata has challenged that 1lakh car so called $2000 car is most fuel efficient with 25miles per liter, least polluting i.e. greenest car and comprising to all pollution and safety norms. More about this car will be known on 10th Jan as he his going to disclose about it at Auto Expo ; an car exibition at New Delhi, India.
Also all other car makers are pushing down Tatas effort to manufacture 1lakh car or by commenting so absurd statements about their car so that Mr. Tata comments on it and the rivals can know more information about it.

Texter Vaid

December 24, 2007 9:12 PM

Crash Test Dummy
-------------------------------------------------
Mr Osama Suzuki seems like a middle tier / new world Savant.
His scorn seems distinctly self-doubt rhetoric.
The competition that he faces from TATA in India is healthy business rivalry, not
kamakazi politics. He shouldnt forget that Japan faced the same disdain but a few decades ago when humbly entering the US market.
The "J" factor but a few decades ago could very easily be misconstrued as "Junk" when the first few low segment cars were introduced in the US.
In time , with refinement Suzuki too blossomed. Tatas are way ahead of that game and are as serious as your intent for quality. Thrash talking can be a two way street or DO ITTA (Move out of the way).

Texter

December 24, 2007 10:15 PM

Crash Test Dummy
----------------------------
Mr Osamu Suzuki recent unprovoked rival bashing make him look like a middle tier / Old world Savant or Sycophant.
His scorn seems distinctly self-doubt rhetoric. The 50% key is what Suzuki takes out of India for each and every car.
The competition that he faces from TATA in India is healthy business rivalry, not kamakazi politics.
He shouldnt forget that Japan faced the same disdain but a few decades ago when humbly entering the US market.
The "J" factor but a few decades ago could very easily be misconstrued as "Junk" when the first few low segment
cars were introduced in the US. In time , with refinement Suzuki too blossomed. Tatas are way ahead of that game
and are as serious as your intent for quality. Mr Osamu, Thrash talking can be a two way street or DO ITTA (Move out of the way).

jcage

December 25, 2007 2:59 AM

Tata got big in India thank to the Raj license in which a few selected companies with the proper connection could produce car or anything in India. This monopolistic company or conglomerate known as Tata could only grow in protected environment.

Ford a company with more experience in combustion powered car when India was a British Colony! Ford spent $2.5 Billion in 1989 to purchase Jaguar from BMW and spent close to $7.5 billions more to improve the technology and quality and the ruined reputation of Jaguar for the next decades and still Ford could not make Jaguar a successful brand!
BMW and Ford did most of the heavy work to improve Jaguar tech, quality and brand name and both fail and pray tell what Tata could do to succeed what two giants (BMW & Ford) of Automotive industry could not do?!

Does Tata got the technology to improve Jaguar or the capital to make it work in the long term? Tata might need to spend several billions more since most of the tech used in Jaguar belong to Ford so Tata got the option to pay for license to use all the Ford technology that is used in the Jaguar or develop its own tech? Tata lack the technology of Ford and BMW but Tata got money so it will have spend a greater amount of money to develop a world class engine, transmission and electronic for Jaguar..

Think about it for a moment, when Ford was trying to sell Jaguar, there were only two India companies that even dare to touch it but there were not any other car companies around the world!! I guess that Jaguar is nothing more than a poison pill that will hurt whoever purchase Jaguar!

Nothing important

December 25, 2007 5:09 AM

hm.. a $2 000 with all that features ?

Good luck

satyendra gupta, pmp

December 25, 2007 1:09 PM

I have full confidence in the managerial capabilities of Mr. Ratam Tata. I agree that TATA group flourished in the raj period but it has performed very well after the raj period too (TCS, VSNL are a few examples). As most of the money of the car goes into the taxes (sales, excise etc) so producing car at rs 100,000 is not a problem. I think even Maruti 800 is produced for less than this price. rest of the money goes into taxes and the pocket of dealers. dealers earn a handsome money. if these expenses can be cut selling car at $3,000 should not be a problem. Why TATA is trying to buy jagaur? I think answer lies in the manufacturing synergy of the two companies and TATA can use jagaur name in india to sell brand lovers and earn lots of profit by manufacturing in India.

-
Satyendra
http://ceospeaks.mrkconsultancy.com/

Raju Singh

December 25, 2007 8:53 PM

Jcage,

Money is not the issue to improve the Jaguar name. Rather it is good innovate ideas that will ignite Jaguar's forgotten popularity. Tata claims he has such an idea. What he does is left to be seen.

Who knows, maybe the Jaguar brand name is the sole cause of its poor rating. The negative reputation of Jaguar still lingers in the minds of consumers today. Maybe Ford could have increased Jaguar sales if they changed the brand name. A brand name change can tremendously change the popularity of a car. Mazda changed the name of the ever-popular Mazda Miata to Mazda RX-7. Sales plummetted even though it was the same exact car, but I don't know why Mazda changed the name of the most popular sports car in America. But my point is, sales could drastically change with a different brand name.

jcage

December 26, 2007 1:21 AM

Raju Singh

Ford did not change the name of Jaguar since Jaguar is the brand name where it is famous or infamous from the quality POV.
Ford tried after spending billions of dollar and man-hours to improve the technology and the quality and the damage reputation of Jaguar. Still people associate Jaguar as a poison pill that hurt BMW and badly damage Ford.

One small correction, Mazda Miada is two seater sport coupe while Mazda RX-7 is a rotary engine so two different car. Also, RX-7 preceed Miata.

manbearpig, Milwaukee, WI

December 26, 2007 12:23 PM

Jcage@
Ford got burned because it tried to reinvent Jaguar as a mass-market car in its largest market, the US. BMW got burned because it tried to import its technology into a proudly British brand. I don't know whether it is true but the strong rumor is that Ford just mounted luxury trappings on its Taurus chassis and called it Jaguar. Ford has not been known as a luxury car maker, and when it started meddling in the manufacturing process of the Jaguar the brand value fell. Contrast this with LR, which is still in the green. Maybe this is because Ford is known for its dependable SUVs?
I don't think Tata is trying to import their technology into Jaguar. The best thing they can do to revive Jaguar is to provide management and marketing capabilities plus capital, but let the car be made the way that the famously anglophile Jaguar drivers (who take pride in being old-fashioned) can appreciate.
If you look at the recent history of Tata acquisitions, you will see that they are more into building up brand recognition than exporting technology. Nothing visible has changed at Tetley or Corus or the Boston Ritz-Carlton after a Tata takeover - the brands remain intact. Possibly they will take the same approach with Jaguar, which will be a good thing indeed.

Raju Singh

December 26, 2007 3:28 PM

My mistake, Jcage. You're right about the Miata and RX-7 thing.

But I restate my point with more conviction, that a past reputation of a car will always linger in the minds of consumers. You said it yourself, "Still people associate Jaguar as a poison pill that hurt BMW and badly damage Ford."

jcage

December 27, 2007 3:28 AM

Yes, Ford did the mistake of trying to put too many Taurus components into the Jaguar and that really hurt Jaguar name. Ford should have tried to develop engine and transmission only for the Jaguar but that would require a lot of investment in R & D and manufacturing a new engine for a Luxury brand. Ford needed to modernize Jaguar to meet new standard of emission, fuel consumption, crash test and add other "Luxury" item to compete with MB, BMW and Lexus et al so Ford had to not by choice but by need. Tata will have to do the same and that will cost $$$.

Also, Tetley tea or Corus steel are just commodity product while a car rely on brand name. Company buy steel if the steel meet the tensile strength and other qualities, then they are purchased regardless of the brand name! Tea is just a small consumer item and not one will put the same amount and effort to scrutinize like they would do to a car since car cost a lot more than a package of tea!

FreeThought WriteFact

January 3, 2008 4:05 PM

JCage,
Thats where a indian will have to show Ford how its done:)

Hopefully , Ford wont milk this deal for all its worth .
Ford's archaic complicated deal-making , chubby involvement, hook into the deal,top-heavy management could be the lead-foot that makes the difference whether these iconic brands can be nurtured by TATAS to a profit and revival. Thats how Ford nearly ran these marquees into the ground.KISS- keep it simple Ford and let it go to a better brighter future with the TATAs.

FreeThought WriteFact

January 3, 2008 4:13 PM

Image Issues ? - Dont Stare @ The Mirror
-------------------------------------------------------------
Its hilarious to hear about US dealers balking at selling Jaguars after they are TATA owned.
Many large enterprises in the US are owned or co-lateral led by a host of foreign companies.
Uncle Sam (Thank God !) is color blind . "Quality Issues" are the last refuge for the uninitiated in global finance.
World Class products are also being refined, tested & honed everyday by Asian & South East Asian countries.
Hotmail has the same quality AFTER being financed and partly owned by an Indian.
Sometimes its not the Mirror that needs light, but the one standing in front of it. Reflect on that ...

Roshan

January 4, 2008 11:49 AM

It is a pretty much an open secret that ford almost killed Jaguar.
u could see that in any Jaguar base segment has pretty much shares components of a top of the notch ford as pointed out by others above.
its the taurus in North America and its the Mondeo in Europe.
check the topgear videos on Youtube or BBC America u will get a better picture of how ford dropped the hammer on its toe.
Tata has an advantage as they are a diversified group are into product services from making trucks to designing components for boeing. If u clearly study the take over of the Daewoo Truck division u would know the takeover didnt hurt the market share or the product.the link will give u a better picture of the take over
http://www.tmtctata.com/journal/Jan%202005/TMTC-Jan2005_Pg19-25.pdf
Nick Nyugen!! arent u tired of writing the same thing in every possible post on India.
dude u need to improve ur IQ and take Globalisation 101 @ school.

raqeeb

January 28, 2008 3:41 AM

wats the price of splash man and when is it gonna be launched.............? lemme know boy i am planning to buy one....

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