About 3 months ago, we first heard of rumours that VW will acquire a 12th brand, which was widely speculated to be Suzuki. VW's uber supremo Ferdinand Piech is an old hand in mind games. During the Polo's launch in the Italian island of Sardinia, he slyly dropped hints to the media that VW is looking acquire 3 more brands after Porsche. When asked by the media if he was referring to Suzuki, he only answered that he has great respect for the small company with a reputation for technical expertise, very much like Piech himself. Osamu Suzuki initially rubbished the report. But today, it is official - VW will acquire a 19.9% stake in Suzuki.
According to Automotive News, Osamu Suzuki was quoted "I don't want you to misunderstand: Suzuki is not becoming a 12th brand for Volkswagen," Suzuki said when asked whether the company might get a German CEO in the future. "I don't want other folks telling me how to do things."
Suzuki Chairman Osamu Suzuki and VW CEO Professor Dr. Martin Winterkorn
But it is quite obvious that it is only a matter of time before Suzuki becomes a wholly owned subsidiary and a first Japanese brand to go under the arms of the German giant. The patriach of Suzuki, Osamu Suzuki is already 80-years old with no heir to inherit the position. Osamu-san was formerly a banker known as Osamu Matsuda, until he married the Shoko Suzuki, the granddaughter of founder Michio Suzuki, and adopted the Suzuki family name. How many more years does one expect Osamu-san to continue to run the show? He also have a reputation of being a very brash and difficult boss to work with and it is not uncommon that managers get an earful from him during press events. It is only eventual certainty that Suzuki will soon become another brand owned by VW.
The news comes after another announcement of a similar Euro-Japanese partnership by the PSA/Peugeot-Citroen and Mitsubishi. The two companies already have an existing model-model collaboration with the Mitsubishi manufacturing its Outlander for PSA to be sold as a Citroen C-Crosser and Peugeot 4007 in Europe. But most bean counters were quick to dismiss the deal nothing more than a union of the weak that is unable to take off very far until both companies sort out the existing high debt ratios.
Out of the deal, VW is promising Suzuki access to crucial alternative powertrain technologies include electric, hybrids and clean diesels. VW in return gets to tap Suzuki's resources and market dominance in India, where it is now the No.1 selling car brand in India under a JV with Maruti. But other than clean diesels, VW does not have any hybrid powertrains that has actually made it to the market. They once showcased a Golf diesel hybrid concept but high cost and a VW's stance that hybrids are still no match to its BlueMotion and TDi clean diesel powertrains meant that the car did not see the light of the day. The main goal is to allow VW to fill up one of the last few remaining pieces in the puzzle before VW can position itself to overtake Toyota to become the No.1 car maker in the world, a goal which VW wants to achieve before 2018. Toyota have played down their interest in maintaing their lead in the volume game, but let's be honest - if there is only one title to the rank of a game master at playing the numbers game, it has to be Toyota. Internally, the company is mad about chasing huge sales volume. Maybe things have somewhat slowed down under Akio Toyoda's leadership, especially after near 5-year long expansion blitz by the previous president Katsuaki Watanabe, that partly blame for Toyota's historic financial loss. But VW needs to be careful, history has shown that the position of being the No.1 carmaker leads to a slippery slope. Just ask GM and even Toyota, amidst their unprecedented losses and numerous serious vehicle quality issues.
According to Automotive News, in the first six months of 2009, Volkswagen sold 3.265 million vehicles and Suzuki sold 1.15 million. Their combined sales of 4.415 million units would be larger than top-ranked Toyota's 3.564 million. It's all part of a numbers game. VW is already the king in China, now the largest car market in the world. India is another rapidly rising car market, and within the next 2 decades India is expected to overtake Japan and Europe to be the world's 3rd largest car market, after China and USA. So it makes sense for VW to line up their chess sets to corner all the major markets. The only significantly growing car market in the world are from BRIC nations - Brazil, Russia, India and China. Out of the 4, VW have already conquered China and Brazil. Doing business in Russia is extremely tricky, not to mention dangerous and I don't think VW wants to plunge in with Putin and Co. so soon. Renault-Nissan with its subsidiary Dacia however, is already drawing up huge plans for Russia following their success in Eastern Europe. So again, the next most logical choice is India. While VW was busy with China, the Japanese of Toyota and Honda are quickly building up their presence there. At the moment, VW is mainly represented by Skoda, with very limited sales of VW vehicles at the moment. But VW is catching up fast. The company have just completed a new plant in Chakan this year and started building the Skoda Fabia in May this year, while production of Polo have just started. A Polo sedan, currently only available in China and Brazil is also set to begin next year.
We have seen the Franco-Japanese alliance of Renault-Nissan to be very successful. Mitsubishi and PSA too have inked a deal. And now Suzuki with VW. This brings us to the next question - is the idea of a "pure Japanese" company going away slowly? Despite Japanese company's international presence, Japanese corporate culture are not known to be very receptive of foreign cultures. Just take a look at the board of any large Japanese corporation, contrast that with GM or Ford or even Renault-Nissan.
Only giants like Toyota might be able to stay afloat on its own. Honda sells more car abroad than they do in their domestic market. Honda is a bit of an oddball in its home country and is not that well received except for a few models that hit the mark - like the Fit (Jazz) and Insight. Part of the reason is that Honda is not part of any big boys club of keiretsus in Japan. And in Corporate Japan - the keiretsus group are very powerful as they indirectly serve each other to lock out foreign competition (or in the case of Honda, from outside their circle). It is one of the reason why foreign car companies can almost never penetrate into Japan. It is also worth mentioning that Suzuki's Wagon R kei car is actually the best selling car in Japan though this is not seen in the JAMA (Japan Automobile Manufacturer's Association) registration figures. For reasons which I do not know, JAMA does not track kei car registrations, and kei cars are the largest car segment in Japan. Please share with us if you know why does JAMA omits kei cars in their registration reports.
Related link : Suzuki Turns 100
2 comments:
AI,
Is proton the next one? I believe its certain.
Ex Sejati Motor
Not sure about with VW. But the partnership between PSA-Mitsubishi certainly going to throw some surprises.
Remember that PSA was at one time one of the partners that was in talk with Proton? And Proton have a model-model collaboration with Mitsubishi on the next generation Waja as well as providing the Exora to Mitsubishi.
Post a Comment