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All eyes on MUL as Suzuki moves in

BS Corporate Bureau

The domestic car industry is expecting exciting times ahead as Suzuki Motor Corporation, Japan, takes a controlling stake in the country's largest car-maker Maruti Udyog.

B K Chaturvedi, executive director, Hindustan Motors, says: "Maruti will now be unrestrained. Both in terms of products as well as long-term financial commitment, it is going to gain a lot.

"It not only bodes well for the company, it is a good sign for the industry also. When a leading player with around 60 per cent marketshare gets new energy, it is time everyone sits up. I am sure competition will create a new environment for the auto industry."

Adds Fiat India vice-president (sales & marketing) Vijay Chandorikar: "It will lead to the government interference in the working of the company being reduced. Hence, decision-making will become quick. We can expect more futuristic products from the company instead of models being repeated with cosmetic changes."

"It is a positive development," says an auto sector analyst with a foreign bank. "In the past we have seen Suzuki being reluctant to pass on technology to the joint venture because of its problems with the Indian partner (the government).

"In fact, the gear box technology never came. Problems also happened over the control of the company with government appointees to the board also being challenged. The Japanese like to work in their own style and hence, in the new regime, we will see a lot of positive steps being taken by the company," he added.

An analyst with Motilal Oswal Securities pointed out that the stock market will also await the listing of Maruti.

"This is a premium company which will add value to investments. The marketshare may decline but the volumes will always keep going up, especially after Suzuki's takeover," he said adding, "We have to remember that the Indian market is bread and butter for Suzuki's worldwide operations and it will leave no stone unturned to maintain its leadership position here."

He also said that if Suzuki decides to launch new products and invest more money into the business, as a market leader it will force other companies to think alike. This will result in value-addition and more excitement for the market.

As of date, Maruti has the largest offering in the Indian market and is present across the price segments except the premium D-segment.

It is also planning to launch several new vehicles in the market such as the Ignis and Grand Vitara (SUV).

However, Honda Siel general manager (marketing) Anand Mohan Gupta says: "I don't see much impact on the Indian industry in the short run. Suzuki already had a 50 per cent stake and a say in the affairs of the company."

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