Maruti Suzuki likely to become OEM for Volkswagen

Suzuki Motor Corp is looking at extending its partnership with Volkswagen with Suzuki India Ltd becoming an original equipment maker for the German automaker for markets outside India.

Maruti Suzuki managing director and chief executive Shinzo Nakanishi said on Wednesday that the company might look to manufacture cars for Volkswagen's global market on a contract basis, in a deal similar to that with Nissan.

"Talks are on with Volkswagen at a global level, but there is still no clear picture. Collaboration can happen in production and product planning between the two companies. The possibility is that we will act as the original equipment maker (OEM) to Volkswagen," said Nakanishi.

Speaking on the sidelines of a function to launch the Alto K10 - a longer and more powerful version of the current Alto 800cc - Nakanishi said exports to Europe for the year are expected to be down 20-30 per cent and that it was looking at other export markets to fill the gap. Last year, it exported 1.2 lakh units to Europe.

Company officials had earlier said that Volkswagen has sent teams to Maruti's facilities to review the cost-competitive manufacturing facilities of the company at its Gurgaon facility. In December last year, Volkswagen had bought a 19.2 per cent stake in Maruti Suzuki's Japanese parent, Suzuki Motor Corp, for $2.5 billion, fuelling rumours of platform sharing and partnerships across markets. While Suzuki is a known expert in small cars, Volkswagen has more experience in larger cars and diesel engines.

Reports said Volkswagen was sourcing technological help of Suzuki to fine-tune its compact car Up!, a concept car it had showcased three years ago. The cost of manufacturing this five-seater small car is way above the car models it has to compete with.