Suzuki Motor Corp. bowed out from one of the largest auto markets in the world as consumers preference shifted to spacious sedans and sport utility vehicles. The decision comes after three years of exiting the market in the United States.
From abandoning the world's top two markets, Suzuki is now looking toward dominating the growing Indian market and the unexploited African territory.
In a statement, Suzuki explained it will transfer its 50 percent stake in Changan Suzuki to Chongqing Changan Automobile Co. pending legal proceedings. Changan will continue to make and sell Suzuki cars in China under a license.
In his comment, Suzuki Chairman Osamu Suzuki recalled how the company had first entered China some 25 years ago by launching the Alto. He said all through these past years, the company has tirelessly cultivated its market in the country. The Chinese market, however, has shifted to larger vehicles and the company has to move to a location where its trademark small vehicles will be much appreciated.
Suzuki was also affected by the Chinese government's push for the country's car makers to increase their production of electric vehicles yearly until the type comprised more than 20 percent of the cars in the country.
In the United States, Suzuki had difficulty producing the type of SUVs that consumers wanted.
The company's decision to move to regions where it can thrive instead of handling the competition heads on is aligned with Chairman Suzuki's thinking. He recognized that his company is small and hence has no chance of beating bigger players at their game.
The Nikkei Asian review stated that Suzuki's venture in India is just the first step towards a bigger ambition of operating in Africa and then subsequently into the Middle East. The company is also planning to capture the market in Hungary, Eastern Europe, and Central Asia. The first in its list would be the Southeast Asian market where Suzuki has already opened a facility in Indonesia in 2015.
At present, Suzuki is already holding 50 percent of the passenger vehicle market in India. In 2017, the company enjoyed a 14 percent increase in its sales in the country, selling 1.65 million units.
With its current plan to focus in India, the company hoped it can sell as much as 10 million units in 2030. Suzuki has been in India since the 1980s and was one among the pioneers there back in the time when big-named automakers had shown little interest in the market.
As a whole, the market share of small cars in China dropped to 6.7 percent in 2017 from 35 percent in 2003 according to Bloomberg, citing data from Cui Dongshu, the secretary general of China Passenger Car Association.
As for Suzuki, sales declined 27 percent in 2017. Its introduction of the Suzuki Vitara and S-Cross sports utility vehicle did not help to pull up the sales.
