Suzuki, Daihatsu double down on minicars in Asia
NAOKI WATANABE and FUMIE IWAMOTO, Nikkei staff writers
TOKYO -- Suzuki Motor and Daihatsu Motor will look to make inroads in Asia with their minivehicles amid the specter of waning tax incentives in Japan.
Tiny vehicles with 660cc or smaller engines, known as kei cars, are popular in Japan. Featuring lower taxes and other costs than for standard automobiles, they account for 40% of new cars sold here.
Some have characterized minivehicles as unsuited for markets abroad, pointing to their isolated evolution in Japan with unique standards. While such critics see them as susceptible to the so-called Galapagos effect, the champions of the cars contend that this has not necessarily been the case.
A 660cc dose for India, Pakistan
"With their improved performance, kei cars have become vehicles that can hold their own globally," said Suzuki Chairman and Chief Executive Officer Osamu Suzuki. "They are especially suited for Asia, where there are many island nations," making small, maneuverable cars a good fit, he added.
Suzuki moved into India in 1983. Taking such steps as installing 1-liter engines in its Alto and Wagon R minicars, it now commands 40% of the market. The automaker intends to charge into Southeast Asia by drawing on its minivehicle technologies. In addition to launching the Wagon R in Indonesia, it plans to construct a plant there at a cost of about 93 billion yen ($905 million).
The company is also considering overseas sales of unmodified Japanese kei cars with 660cc engines. Its Indian unit has taken on 660cc cars on a trial basis, with sales in Pakistan under consideration as well. The chairman notes that some view the Japanese-made 660cc engines as offering superior performance.
Suzuki is not the only minivehicle maker with global ambitions. "We hope to promote the low prices and resource-saving features of kei cars in emerging markets as well," Daihatsu President Masanori Mitsui said last month.
Daihatsu posted its fourth straight record operating profit last fiscal year, thanks largely to strong sales in Indonesia and Malaysia. Overseas sales of small cars that draw on its kei technologies accounted for roughly 40% of its total tally.
The automaker can turn a profit even on the cheapest kei car in Japan because of its strong production technologies. A plant in Oita Prefecture that specializes in the ultrasmall cars is crammed with articulated robots. A typical factory its size has a production capacity of 100,000 units, but the Daihatsu facility can churn out double that figure. Honda Motor President Takanobu Ito, who has a technical background, famously sketched the interior of the plant during a visit because photography was prohibited.
Daihatsu brought the production technologies of the Oita plant to a new factory in Indonesia, where it released the Ayla. And in Malaysia, it rolled out the Viva, another kei technology offering that has proved popular.
Minivehicles are at the cutting edge of technological innovation. Daihatsu aims to develop a technology for reducing vehicle weight by using plastic body panels around a rigid frame, with an eye on selling such cars abroad.
Both Suzuki and Daihatsu sell cars that run more than 30km on a liter of gas -- on par with hybrids -- and strive to best each other. With many countries in Southeast Asia and other emerging nations expected to adopt fuel-efficiency regulations as stringent as those in Europe starting around 2020, the race to build cars with better mileage leads directly to international competitiveness.