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Suzuki chief executive officer skeptical of prospects for US$3,000 car in India

Suzuki Motor is taking a cautious view of the race to build a US$3,000 car in India, where the Japanese mini-car specialist is the market leader, its chief executive officer said yesterday.

India's Tata Motors has said it plans to introduce a US$3,000 car in its home market next year, while Nissan and Renault are considering jointly launching a similarly priced vehicle in India by 2010.

But Suzuki chairman and chief executive Osamu Suzuki expressed skepticism about prospects for such a low-priced vehicle.

strict standards

"Global standards for emissions, environmental protection and also automobile safety are all becoming stricter each year. It's not really clear which standards, in which year, this US$3,000 car is aiming to meet," he said.

"For example, will airbags be included? Will there be seatbelts? These are questions that really need to be considered," he told reporters.

"So our fundamental stance is that rather than Suzuki becoming very concerned and watching over its shoulder to see what other people are doing, Suzuki has decided to move forward at its own pace," he said.

Suzuki was an early entrant into the Indian market when the billion-plus nation started opening up its economy in the 1990s following decades of socialist protectionism.

challenge

Maruti Suzuki India Ltd, which is majority owned by the Japanese automaker, now has a market share of more than 50 percent in the fast-growing Indian market. However, its dominance is being increasingly challenged by global automakers.

"Going forward the idea of our being able to maintain this 55 percent share is something that's going to be very difficult to achieve," said Shinzo Nakanishi, managing director of Maruti Suzuki India Limited.

"We will strive to keep this very large market share. However we do realize that competition is going to be fierce going forward," he said.

Chief executive Suzuki was more optimistic.

"We will forever maintain a 50 percent or more share of the [Indian] market. It all really depends on the product," he said.

Meanwhile, General Motors (GM) said on Tuesday it had made a bid for a stake in Russian carmaker Avtovaz as part of a push into the country's growing auto market.

"We have submitted an offer for a significant stake for Avtovaz," said GM spokesman Tom Wilkinson, confirming a report earlier in the Wall Street Journal. "It's part of our continuing strategy for growth in Russia."

The spokesman offered no details on the bid or when GM expected a response.

GM in Russia

Russia is a key country for GM, one of the fastest growing emerging markets after China. GM is trying to position itself in some of these markets to offset losses in North America, mainly to Japanese rivals.

Wilkinson said he expected GM to double its sales in Russia this year compared with a year earlier to around 250,000 vehicles.

"Chevrolet is the No. 1 non-domestic brand in Russia," he said, noting that GM already has a joint venture with Avtovaz that produces the Chevrolet Niva sports utility vehicle.

Italy's Fiat SpA also has expressed interest in investing in Avtovaz, the Journal said.
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