Actuality September 2007

Suzuki wants to produce expensive off-road car Grand Vitara road at the automobile plant in Saint Petersburg. But it is not enough to work up Russian market, therefore the car-concern wants to deliver cheap machines from India to Russia. Their cost will start from $10 000, experts consider.

In 2006 Suzuki Motor produced 2,4 million car and 3,2 million motorcycles. Sale proceeds for a fiscal year, ended in March, 2007, was $26,86 billion, net income was $636,79 million

Suzuki has an eye on Russia for a long time: by the end of 2009 together with its distributor Itochu wants to build a plant in Saint Petersburg which will produce 30 000 cars a year. Suzuki plans to produce expensive models at the new enterprise, such as off-road cars Grand Vitara (now it costs from $28 000) and crossover SX4 (from $19 600).

But simultaneously Suzuki is thinking about delivering to Russia “budgetary” cars with one liter petrol engine. From 2008 the car-concern will begin to produce them in India. How many of such cars Suzuki will deliver to Russia is not reported. The representative of Suzuki declared that the final decision about such deliveries is not accepted at all. And the representative of Russian office of Itochu Tat’yana Shumskaya refused to give comments.

It’s not known much about Indian new product Suzuki yet. According to Nikkei, in India this car will cost about 800 000 yen ($7000). In Russia taking into account the customs fees and VAT the cost of this car can grow to $10 000, as the leader of group of custom practice counted up.

Car industry expert of the company Ernst & Young Ivan Bonchev conjectures that Suzuki created the “budgetary” car on the base of cars of class A— Alto or according to the example of its business rivals it will present the car of B class specially developed for developing countries. In first case new product of Suzuki can drive out Daewoo Matiz from Russian market, because its sales fall off constantly, as Bonchev states. In that case Suzuki will have to compete with the Chinese cars, for example with cheap BYD Flyer. If Suzuki starts in Russia the car of B class, it will have to run into competition with Renault Logan, Chevrolet Lanos and with other “budgetary” products of foreign car-concerns.

For Suzuki such step in any case is justified. A new car would help the Japanese concern to multiply the sales in Russia. In fact last year the sales of brand in Russia were only 16 118 cars, for the first seven months of this year they were 15 851. And by 2014 the company plans to raise to the volume of sales to 50 000 a year. Bonchev considers that at the successful price positioning Suzuki will be able to sell from 10 000 to 40 000 “budgetary” cars a year. Now the cheapest car of sold in Russia is Liana, which costs $16 600 and is in good demand, a manager of the Suzuki sales notices. Cheap Suzuki, even made in India, would be selling well also.

Competitors of Suzuki

A boom on designing of “budgetary” cars began at the end of the last year. GM promised to develop minicars at a cost $7000-8000 and cars of compact – class from $9000, Skoda (it is included in the concern Volkswagen) will offer a car for 7000-8000 euros, Nissan and Toyota — from $6000 to $9000, and Renault develops cars cheaper – Logan — from $3000.