Maruti open to partnerships to secure automotive supply chain

Maruti Suzuki is looking to form partnerships with auto part makers so to secure its future supply chain as well as maintain its leadership position in the auto market, the company's chairman R C Bhargava said in an interview. The company currently holds 43% market share and partnering with suppliers in its early years has contributed a lot to its success in the country. This has also helped establish a supply chain for combustion engine cars.

Over time, automotive supply chains are changing with growing demand for more technology in cars and a shift to 'greener' powertrains like electric and hybrid. Thus, automotive supply chains globally need large investments to keep up pace. "If required somewhere, we will get into a joint venture," said Bhargava, when asked what role Maruti would play in setting up and securing its future supply chain.

However, the company is yet to identify specific areas for an alliance. "We have done it in the past. Maruti built a very strong supply chain because we partnered vendors and have been working with them," he said. At present, Maruti has about 20 joint ventures with its suppliers.

Currently, Maruti dominates India's car market with its small, low-cost vehicles. But it faces growing competition because buyers shift to bigger cars like sports-utility vehicles (SUVs) and regulators demand more safety features, making the costs go up.

The company is also looking to expand its portfolio and adding more SUVs but it is behind rivals which has resulted in its market share falling to 43% from more than 50% two years ago. "There are two markets in India now," Bhargava said referring to the small car market and one with "fancy gadgets" and SUVs.

(with inputs from Reuters)