Suzuki To Make Inroads Into India’s Electric Vehicle Market

Japanese auto maker Suzuki Motor plans to invest $1.23 billion in India for electric vehicles and their batteries in a bid to catch up with competitors.

Suzuki said on Sunday it had signed a memorandum of understanding with the western state of Gujarat an event attended by Indian Prime Minister Narendra Modi and his Japanese counterpart Fumio Kishida. “Suzuki’s future mission is to achieve carbon neutrality with small cars,” Suzuki President Toshihiro Suzuki said in a statement. “We will continue active investment in India to realize self-reliant India.”

While the EV plant would be the Japanese company’s first in India, Suzuki is already in a race with local automotive giants Tata Motors, billionaire Anand Mahindra‘s Mahindra & Mahindra conglomerate and TVS Motor, run by billionaire Venu Srinivasan.

“Maruti Suzuki’s EV foray will help it gain stakeholder confidence and hold market share,” says Soumen Mandal, an automotive-focused analyst with Counterpoint Research, referring to Suzuki’s Indian subsidiary.

Suzuki risks “losing market share” in India to its domestic peers and Korean billionaire Euisun Chung’s Hyundai Motor without an EV production plan, says Mandal. Tata has indicated it will invest $2 billion, Hyundai plans to spend $500 million and Mahindra & Mahindra aims to invest $400 million over the next few years, he notes.

Maruti Suzuki had a 44% share in the domestic passenger vehicle market in 2021, Counterpoint estimates. It holds an economies of scale “advantage” over its peers today as it sells vehicles targeting low, mid-market and premium categories, a price spread that helps it stay ahead of other brands, Mandal says. But he says Tata leads the market in passenger EVs, while Suzuki has “yet to enter the EV space”.

Suzuki, a 102-year-old vehicle maker, will attract consumers because of its long-standing name in conventional motorcycles, says Song Seng Wun, a Singapore-based Asia economist with the private banking unit of Malaysian bank CIMB. “Their name has been associated with two-wheelers for so long that they are far more recognized than anyone else,” Song says.

Foreign firms that are just “tapping into” the Indian market face complex rules and barriers plus a consumer preference for local brands, he adds.