Suzuki: enhances operations in Southeast Asia, Japan and India

Looks to capture 30% of mini vehicle market in Japan

2013/05/22

Summary

Suzuki's new vehicle sales by region In recent years, Suzuki has been enhancing its production and sales businesses in Southeast Asia in addition to Japan and India. Particularly in Thailand and Indonesia, the company is expanding its businesses whereas it is confronting the stagnant European market, significant sales drop in China and discontinuation of businesses in North America.

 In India, the largest market for Suzuki, its new vehicle sales for the fiscal year ended March 2013 increased by 4.4% y/y to 1.05 million units. Strong sales of the new models including the Ertiga and the Swift DZire supported Suzuki's business growth. The company plans to raise its annual production capacity to two million units by 2016 through adding a third line at the Manesar plant and building a new plant in Gujarat state.

 Suzuki's overall sales in Japan for the same fiscal year climbed by 12.7% y/y to 672K units as sales for both mini and non-mini vehicles increased. In the mini vehicle market, though, where the competition has been getting fierce due to the launch of Honda's N BOX, Suzuki's share dropped to 29.7%. The company has adopted the advanced fuel saving technologies for the new Wagon R launched in September 2012. With more fuel efficient models using these technologies, Suzuki aims to increase its mini vehicle sales and acquire a market share of at least 30%.

 In China, Suzuki's sales for the same period plummeted by 14.5% y/y owing to the worsening relationship between Japan and China. While its joint venture, Chongqing Changan Suzuki Automobile, is constructing a second plant, the company will decide when to start operations at the new plant, eyeing the recovery of the demand in the country.

 In the ASEAN region, Suzuki has started operations at its new plant in Thailand in March 2012 to produce the new Swift. The annual production capacity at the plant will be increased to 100K units by 2016. In Indonesia, the company plans to build a new engine plant with a capacity of 100K/year in 2014. Suzuki's annual production capacity of the compact cars in the country will also be raised from the present level of 100K units. Suzuki aims to increase its exports of finished vehicles from Thailand to Indonesia and vice versa.

 Suzuki's global sales for the fiscal year ended March 2013 increased by 3.9% y/y to 2.66 million units. Both the company's net sales and profits improved, reporting a record high net profit of JPY 80.4 billion. For the fiscal year ended March 2014, the company forecasted that its sales would grow to 2.80 million units, up 5.4% y/y. With weaker yen and sales increases in India and Southeast Asia, it aims to realize net sales of JPY 2.8 trillion, an operating profit of JPY 150 billion and a net profit of JPY 90 billion.

 International arbitration regarding cancellation of the comprehensive contract on the capital and business partnership between Volkswagen and Suzuki is still pending as of May 2013

Suzuki's new vehicle sales by region

(1,000 units)
Japan Europe North
America
Asia Others Grand
total
India China ASEAN Others Subtotal
FY ended March 2011 588 244 33 1,133 290 96 106 1,625 153 2,643
FY ended March 2012 596 223 32 1,006 296 121 127 1,550 160 2,560
FY ended March 2013 672 197 30 1,051 253 186 98 1,588 174 2,660
FY ended March 2014 (Plan) 660 220 3 n.a. 1,756 164 2,803

Source: Suzuki's financial results reference/presentation material 2012.5.10/2013.5.9
(Note) Of the sales (186,000 units) in the ASEAN countries for the fiscal year ended March 2013, 139,000 units were sold in Indonesia, 33,000 in Thailand, 7,000 in Malaysia and 7,000 in other countries.