Maruti to set up auto components JV

Maruti Udyog Ld is setting up a joint venture with Bellsonica Corp of Japan to make components for Suzuki motorcycles and cars in India. An extension of the Nissan-Suzuki alliance in Japan, the new joint venture will manufacture sheet metal, chassis and components for Maruti cars and Suzuki Motorcycles India.

Maruti, which is 54.2 per cent owned by Japan's Suzuki Motor Corp, has yet to disclose its stake in the panned joint venture. Industry analysts expect Maruti to hold a 30-per cent stake in the Rs12-crore joint venture.

Maruti Udyog has alliances with several component manufacturers like Jay Bharat Maruti Ltd, Sona Koyo Steering Systems Ltd, AIS Glass Ltd, Krishna Maruti Ltd and Caparo Maruti.

Nissan and Suzuki had, earlier this month, announced an expansion of their alliance, which would involve production of Nissan cars by Maruti Udyog, Suzuki's Indian subsidiary. The two companies already share production facilities in Japan, supplying vehicles under each other's brands.

The exact time frame for production of Nissan cars by Maruti or the models to be produced have not been disclosed. However, Nissan is expected to source small cars from Maruti for the European and Indian markets.

There has been some media speculation that Nissan is eyeing a large financial stake in Suzuki to strengthen its small cars portfolio. Suzuki is one of the largest manufacturers of small cars and such a tie-up would help Nissan to penetrate emerging markets.

General Motors, which held a nearly 20-per cent stake in Suzuki, had sold off most of its stake recently to improve its precarious financial position.

Nissan currently has only one model, the SUV X-Trail in India, which it imports as a fully built unit making its pricing uncompetitive.

According to unconfirmed reports Maruti is planning to launch Nissan's small car model Moco as the replacement for its B-segment model Zen. Moco is produced in Japan by Suzuki, which sells it under the name MR Wagon.

Maruti's new plant in Manesar is expected to go on stream by the end of this year. The new plant would have a capacity of 1 lakh-units per annum, which may be increased to 2.5-lakh units over the next three years.

Maruti and Suzuki have also floated a JV to produce diesel engines and transmission systems, which is also expected to go on stream by end of this year.

Incidentally, French auto major Renault holds a nearly 45-per cent stake in Nissan. Carlos Ghosn, who as CEO of Nissan turned around its fortune in the '90s, is currently the CEO of Renault as well. Renault has a JV with Mahindra & Mahindra to manufacture the its low-priced sedan, Logan, in India, which is due for launch next year.

Maruti, meanwhile, has reported total sales of 53,396 units for May 2006, including exports of 2,492 units, as compared to 42,286 units during the same month of pervious year — an increase of 26.27 per cent, with strong growth in the premium hatchback segment. Sales of models like Alto, Wagon R, Zen and Swift increased by 38.56 per cent to 36,066 units over 26,030 in May 2005.

• Maruti managed a modest rise in volume sales of entry-level model Maruti-800, selling 6,743 units during the month as compared to 6,116 units in May 2005.
• In the passenger van segment, the company's models Omni and Versa saw a marginal decline to 5,295 units as compared to 5,435 units for May 2005.
• Sales of mid-sized sedans like the Esteem and Baleno increased by 9.93 per cent to 2,458 units as compared to 2,236 units for May 2005.
• Total domestic sales for the month increased by 27.24 per cent to 50,904 units from 40,006 units a year ago. Exports also inched up by 9.3 per cent to 2,492 units as compared to 2,280 units during the same month of previous year.
• For the first two months of 2006-07, sales have increased 19.94 per cent to 96,523 units as compared to 80,476 units for the same period of previous financial year. Domestic sales increased 20.14 per cent while export sales improved by 15.64 per cent.
• During April-May 2006, sales of premium hatchbacks increased by 32.94 per cent. Sales of Maruti-800 declined 4 per cent during this period while mid-sized sedan sales increased 7.09 per cent.