Through the cross-branding deal between country’s largest car maker Maruti Suzuki’s parent firm Suzuki Motor and Toyota Motor, Maruti can help increase the market share in the country’s premium car segment. This will help Maruti to develop hybrid and electric vehicles for a long term. Maruti can achieve Green Technology with this deal.
Some people feared that Maruti could be less dominant in the Indian car market after the introduction of electric vehicles. Given the access to Green Technology from the Toyota deal, their fears would have gone away. Some investors thought this was due to the huge amount of investment required to develop new powertrains. With Deal of Suzuki, Toyota Motor India is expected to gain far more than Maruti in the medium term.
Under the cross-branding deal, Suzuki will supply its best selling cars Baleno and Brezza to Toyota in India, while Toyota will supply Executive Sedan Corolla to Maruti. Products of Maruti and Toyota are complementary to each other. In fact, Maruti’s 95% of sales volume is attributed to the vehicles that cost less than Rs.10 Lakh, while Toyota gets 75% volumes from vehicles with more than 10 lakh. With this deal, Maruti will get marketing insight regarding sedan such as Corolla. This will improve its understanding in terms of product development and capital expenditure. The sales of High Margin Executive Sedan segment can be increased by using locally manufactured parts. At present, 1,000 vehicles are sold in this segment every month.
In the first 11 months of the financial year 2018, Maruti has sold 2.80 Lakh units of these two models. The waiting period for these trains is 5–6 Weeks. Baleno and Brezza share in India’s total passenger vehicle segment is 11%. Toyota’s market share is less than 5% and it receives most volumes from expensive vehicles such as Innova and Fortuner.