Suzuki to focus on India after quitting Chinese market

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A failure to develop new energy vehicles (NEVs) and adapt to consumer trends has pushed Japanese carmaker Suzuki out of the Chinese market after 25 years, according to a statement released Tuesday, with the company set to switch its focus towards the Indian market.

The automaker, long regarded as a specialist in small compact vehicles, confirmed it would transfer its 50 percent stake in the Changan Suzuki Automobile Co. joint venture to its Chinese partner.

An official from the company told Nikkei Asian Review “the company has little prospect of improving sales in China, and thus is unable to pour resources into developing vehicles for the Chinese market.”

The move comes after Suzuki pulled out of a joint venture with Jiangxi Changhe Automobile Co. in June, and follows the Japanese carmaker’s decision to quit the US market in 2012.

With the company now absent from the world’s two biggest auto markets, Suzuki has announced it will look to focus on strengthening its hold on the Indian market and establishing a new presence in emerging African car markets.

Suzuki has dominated the market in India since setting up the Maruti Suzuki joint venture in 1982. Sales figures published in July showed Suzuki’s market share in India in the first quarter increased to 52.54 percent.

The carmaker’s latest annual report, published last week, revealed plans to triple its sales volume in India by 2030, as it looks to maintain its 50 percent hold on the market.

Maruti Suzuki's range of compact, smaller vehicles has long been popular with Indian consumers. /VCG Photo

Approximately three million cars are sold in India every year, a small amount when compared with the 24 million units sold in China last year. However, according to China Daily, the Indian market could expand in size to 10 million units sold per year by 2030.

The decision to quit China could be a shrewd move for Suzuki, which has failed to launch any NEV or SUV models in recent years.

The Changan Suzuki joint venture saw sales peak in 2011 at 220,000 units sold. However, changing consumer preferences for SUVs and larger vehicles in the Chinese market coupled with policies encouraging NEVs have seen those figures drop dramatically, with only 21,000 units sold in the first five months of this year, according to China Daily.

Car manufacturers in China will be required to meet a 10 percent NEV production quota by 2019, with the NEV sector booming in recent years as domestic and foreign companies increase production of NEV models.

A study by China Youth Daily published last month showed 73.5 percent of Chinese consumers would consider buying electric vehicles.

China has been the world’s biggest NEV market for three consecutive years. Some 777,000 NEVs were sold in China last year, with the government expecting annual NEV output to hit two million in 2020, and for NEV sales to make up 20 percent of the overall auto market by 2025.