Maruti Suzuki India Ltd., the country’s largest carmaker, announced recently its board decided to agree to a contract manufacturing deal with a local division of Japan’s Suzuki Motor Corp. to construct a new plant in Gujarat.
Suzuki Motor Gujarat Pvt. Will be tasked to produce vehicles and parts exclusively for Maruti for up to 30 years, if the agreement is also approved by minority shareholders and gains the necessary regulatory approvals, commented the New Delhi-based automaker in a filing Saturday to the Bombay stock exchange. Suzuki announced back in January 2014 it would invest 50 billion yen ($417 million) in the production and construction of the assembly facility. Output should be started in 2017, with the factory having an initial yearly production capacity of 100,000 units, with the Japanese automaker adding that all of it is reserved to Maruti. The carmaker is aiming to receive minority shareholders’ approval to have Suzuki the owner and investor in the Gujarat plant, commented last month Maruti chairman R. C. Bhargava.
Japan’s Suzuki, a second tier automotive manufacturer specialized in delivering small and accessible models, has recently emerged from a crisis following years of contention with Germany’s Volkswagen AG. The Japanese automaker and the world’s largest carmaker, now engulfed in a massive diesel emissions scandal, were partners with exchanged share holdings but immediately had their deal gone sour. Now an arbitration court has forced VW to sell its stake in Suzuki – the Japanese bought it back immediately – and the latter also divested a small holding to Porsche SE, the controlling force behind VW AG.