Suzuki India: Investment Plans Put on Hold: Three Reasons Why…

Suzuki expansion plans paused due to the current downturn and the uncertainty that exists in the government’s policies related to electrification…

As we have been spelling out, Suzuki is the only major manufacturer in India to consistently report growth in a market where almost everybody else is in the red. However, in the larger scheme of things, India is going through one of its biggest downturns for the last many years and the automotive sector has been particularly hit very badly.

Suzuki currently has a manufacturing plant in Gurgaon with an annual capacity of 10 lakh units. They are very close to maxing it out and had chalked out plans to commission a new plant in India, to be future ready. However, as things stand today – the company has decided to hold back its decision for now, according to a report at Economic Times.

Devashish Handa, Vice-President, Suzuki Motor India, says that there is a requirement but it is not immediate. He cited three major reasons for this postponement of investment in India…

Suzuki Expansion Plans Paused – Reasons

Current Recession – Everybody is being very cautious in the current scenario when buyers are resisting purchasing new motorcycles and scooters. Top manufacturers like Hero and Honda are losing lakhs of units in Year on Year numbers. This has left Suzuki worried about the prospects and it wants this atmosphere to clear out before finalising something major.

Suzuki expansion plans
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Transition from BSIV to BSVI – Devashish believes that the upcoming transition from Bharat Stage IV to Bharat Stage VI (yes we are leapfrogging!) will be very crucial. It is not only technically challenging for manufacturers but it has the the capability to impact a lot of things. Suzuki wants to see how the market reacts to this transition (and the resultant price hike) before putting the money on the table!

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Electrification – Amidst a lot of new and tough regulations which have already hurt the market sentiments, our Government has been pressing makers to turn electric. In fact, there were underlying plans to pull the plug on internal combustion engines of under 150cc capacity by around 2025. This has left almost every major manufacturer in a quandary and all of them have opposed this decision. Suzuki also intends to wait and see the government’s mid to long term stance on electrification.

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We believe no manufacturer will want to commit to the market in these turbulent times. Also, everyone is hoping and soliciting a long term plan regarding the auto market from the government.

Source Economic Times