Suzuki and VW Agree to Develop Small, Inexpensive Car for Developing Countries
By Scott Doggett December 16, 2009
Suzuki Motor Corp. and Volkswagen AG will begin work on joint projects starting around January 10, after the year-end holidays, Suzuki CEO Osamu Suzuki said today.
Right, the 2010 Alto Concept. The production version is expected to be nearly identical.
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"We generally understand what we want from each other, through information exchange up to now," the CEO told reporters at the launch of the new Alto minicar in Tokyo.
"Actual, detailed execution - with our people going there and their people coming here - will be after January," he said.
Suzuki said the new partners have agreed they want to develop a competitive, small car, seen as key to expanding sales in developing countries.
Responding to a report in Indian newspaper Economic Times quoting a top Maruti Suzuki India official as saying that VW and Suzuki may develop a small car that would cost $4,300-$5,400, Suzuki said: "Suzuki Motor has authority over this, not (Indian subsidiary) Maruti."
Clarifying his comments, Maruti Chairman R.C. Bhargava said the parent company, not Maruti Suzuki, is speaking directly with VW.
"What I have said is, one of the possibilities is that Volkswagen could outsource a small car from us," he told Reuters news service.
Analysts said joint development of a small, low-cost car would be mutually beneficial, giving VW the coveted expertise of profitably making tiny cars and Suzuki the economies of scale to be more cost-competitive.
Suzuki Motor has long been the top maker of 660cc (.66-liter) mini-vehicles, a segment that exists only in Japan and gets preferential tax treatment. While the engine size is not optimum to get the best fuel economy, decades of experience in microcars has helped Suzuki build up expertise in developing cheap but reliable cars.
The Alto model, launched in 1979, was CEO Suzuki's first major project at the helm. Costing just $5,250, it became an instant hit, and cumulative sales in its 30th year hit 10 million units this year.
"The Alto, for me, was the trigger for Suzuki to enter the automaking industry," Suzuki said. "I think we will add another 10 million units at a faster pace."
Suzuki aims to sell an average 7,000 seventh-generation Altos in Japan each month. The model starts at $7,561 for the commercial van, and at $8,183 for the passenger car model.
Because the new Alto will have Suzuki's stop-start system installed that shuts down the engine when it would otherwise be idling and re-starts it when the brake is disengaged, it should be fuel efficient.
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