Suzuki sets aside lion’s share of $1.5 bn R&D budget for Maruti
NEW DELHI:MOST of the $1.5 billion allocated by Suzuki Motor Corp. (SMC) for its research and development (R&D) activities will be spent on its most profitable unit Maruti Suzuki and help the Indian firm maintain its 50% market share amid increasing competition from European and Korean manufacturers.
The money will be used to upgrade Maruti’s existing models to Bharat Stage VI emission norms—most stringent globally—by 2019, to develop an entire range of hybrid vehicles and other alternative technologies, two people aware of the matter said. Reuters on May 10 reported that Osamu Suzuki, chairman, Suzuki Motor Corp., in a post-earnings conference call said the company needs to find ways to maintain its current market share in India till 2030 when the Indian passenger vehicle market is tipped to touch the 10-million mark annually.
According to one person aware of the matter, Maruti Suzuki has a huge task at hand in upgrading its existing 14 models to comply with the BS-VI emission norms, which will takes effect on April 1, 2020. A full range of hybrid vehicles—from the current SHVS or mild hybrid, to full hybrid and plug-in ones—will also be developed by the company in association with Toyota.
“The company will focus on making the full range of hybrids as meeting the CAFE (corporate average fuel efficiency) norms will be impossible without hybrids,” said this person.
The new spends on R&D will take a toll on Suzuki’s earnings (and of Maruti to an extent) for the financial year ending March 31, 2019.