Suzuki sent a shockwave through the automotive industry as it announced the end of its joint venture with Jiangxi Changhe Automobile in China. The Japanese brand offloaded its 46 percent stake in the joint venture, citing sales slump in the Chinese market. The sudden reveal has given its suppliers and dealers cold feet. Sales in China have witnessed a steady decline over the past few years. Despite having two joint ventures, Suzuki managed to sell 1,00,000 units last fiscal year, which is a drop of 30 percent compared to the 2016 fiscal year.
The sales dip in China comes at a time when Suzuki’s global sales are at a record high of 3.2 million units. The biggest contributor to its sales chart is India, which accounts for more than 50 percent of Suzuki’s global sales. The Japanese carmaker has three manufacturing facilities in India, with a cumulative production capacity of 1.75 million units per annum. Suzuki’s India domination can be made out from the fact that seven of the top 10 cars sold in India in May 2018 were from its portfolio. Suzuki’s most popular product in India is the Dzire and it will be launching the Maruti Suzuki Ciaz facelift soon.
Suzuki’s popular offerings in the Chinese market include the Vitara and the S-cross. However, with the Chinese population’s rising source of income, there’s a visible shift in preference towards premium brands. Another major reason for Suzuki’s downfall in China is the government’s aggressive push for electric vehicles. Suzuki doesn’t have a single electric car in its portfolio and this has been its undoing. In comparison, its compatriots, Toyota and Honda, have adapted swiftly to newer Chinese market trends with modern offerings to sustain sales.
Suzuki hasn’t thrown in the towel yet as the company is in talks with Changan Automobile to launch Suzuki-branded electric cars in China. It had also announced that it will be launching electric cars in India by 2020. While there are speculations that Suzuki might exit China, Osamu Suzuki, chairman of Suzuki Motor Corporation, has played down this proposition. In the past, Suzuki had exited the US market (the second largest in the world) in 2012, citing drop in sales and to focus its attention in India. Suzuki finds itself in a tough spot in the largest car market in the world, and whether it will sustain its Chinese operations is something only time will answer.