Toyota Motor Corp. and Suzuki Motor Corp. are exploring ways to expand their partnership in India beyond vehicle development to include joint sourcing of components as part of a strategy to cut costs, especially for their full hybrid offerings, said two people aware of the development requesting anonymity.
As part of the exercise, Toyota Kirloskar Motor Pvt. Ltd (TKM) is likely to tap several suppliers of Maruti Suzuki India Ltd (MSI) for some of its new models such as the upgrade or replacement of Innova Crysta multi-purpose vehicle slated for launch in 2021-22. Maruti is India’s top carmaker mainly due to its large fleet of affordable small cars thanks to the automaker’s expertise in low-cost production.
The two people said Toyota has parted ways with some of its vendors to accommodate those of Maruti. This, the first person said, is the initial step towards Toyota gradually adding more Maruti suppliers to its vendor base.
Maruti and Toyota Kirloskar did not respond to queries emailed on 2 March.
Automakers globally are seeking to cut costs of developing and producing vehicles by partnering to invest more efficiently in new and expensive technologies such as electric and hybrid powertrains, and autonomous vehicles. Toyota and Suzuki first came together in 2017 to develop affordable hybrid and electric vehicles for the Indian market.
Toyota had then agreed to supply its hybrid technology to Suzuki. The two companies later agreed to sell each other’s products in India and overseas markets. They deepened their ties last August by buying small stakes in each other.
Vikram Kirloskar, vice-chairman, Toyota Kirloskar, said on 26 February that the company is “trying to learn how Maruti produces and how they can make in such high volumes at such reasonable prices and how well they purchase and all.” “They are also looking at our systems as well. How can we make such a big reliable car,” Kirloskar said.
The second person cited above said Toyota has made cost reduction a priority as it prepares to source parts for new vehicles slated for launch around 2022, including for strong hybrid powertrains to meet upcoming stringent fuel efficiency norms.
“Hence, they have been talking to some of the Maruti vendors for certain parts which were usually sourced from Toyota’s own vendor network. If the Maruti suppliers can provide the parts at a lower cost, the company plans to go ahead with them,” the person said. “This is the way both companies are trying to build synergy in the back-end, since they may not be able to do it directly due to anti-competition laws”.
