Suzuki raises stake in Maruti by $1.8bn

Business Materials 30 October 2007 06:00 (UTC +04:00)

Suzuki of Japan plans to invest up to $1.8bn in India's largest carmaker as it races to claim a bigger share of the world's fastest-growing passenger car market amid fierce competition.

The move by Suzuki, the majority owner of Maruti, follows the company committing $2bn last year to boost the Indian carmaker's production to 1m vehicles a year by 2010.

Interest in the country was further demonstrated when Carlos Ghosn, chief executive of Nissan and Renault, kicked off a visit to India this week to discuss a possible partnership between Renault and Indian motor­cycle maker Bajaj to produce a $3,000 car that would rival Tata Motor's planned "one-lakh" ($2,500) car.

Rajiv Bajaj, managing director of Bajaj, said the companies would take a few more months to conclude whether such a project was feasible. "But if we have to put a product out by 2010 we can't take forever with the feasibility plan," said Mr Bajaj at a press conference with Mr Ghosn on Monday.

"Having never put anything on four wheels," producing a small car with Renault would be a learning experience, said Mr Bajaj.

Mr Ghosn also signed a $500m pact to form three joint ventures between Nissan and Indian truckmaker Ashok Leyland to produce light trucks, engines and other technology in India for both domestic and export markets.

The agreement between Nissan of Japan and Ashok Leyland "accelerates our light commercial vehicle business in India and lays the foundation for further growth through exports", said Mr Ghosn.

The multi-pronged entry into India is a way for Renault to diversify from Europe's saturated market, which accounts for a majority of the French automaker's sales. Ramping up in India would also bolster Nissan's sales of cars and trucks in Japan.

Renault has a joint-venture with Indian automaker Mahindra & Mahindra, which launched the Logan saloon in India this spring.

But Renault would face tough competition from Maruti, which claims more than half of India's car market. Maruti said on Monday that its second-quarter net profit jumped 27 per cent to Rs4,665m ($118m) from last year. Domestic sales grew 17.8 per cent to 191,325 units during the quarter, including 15,171 exports. ( FT )