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Business

New president takes over from charismatic father

Osamu Suzuki, right, announces that he has handed the presidency to his son, Toshihiro Suzuki, on June 30.

TOKYO -- Osamu Suzuki, Chairman and CEO of Japan's Suzuki Motor, has led his company through from its youthful days as a small automaker in Hamamatsu, Shizuoka Prefecture, through to becoming the 10th largest in the world.

     But the CEO is not willing to stop just yet. He is pushing the company's Indian subsidiary, Maruti Suzuki India, to capture a 45% share of the Indian auto market, the largest in the country, to ensure its solid foundation in the world's second most populous nation.

     However, maintaining the lead will not be easy. Unlike Japan and other mature markets, existing companies easily lose shares in growing markets due to the continued entry of new rivals.

     For example, Volkswagen has long enjoyed the largest share of China's auto market. But the German maker's market share dropped from 50%, achieved 15 years ago to 15%. Despite the drop, many do not see it as a problem because Volkswagen's sales volume has significantly increased.

     But Osamu Suzuki is not satisfied with increased sales in exchange for a smaller market share. He believes that India's new car market is approximately 2.6 million units a year and that the figure will grow to around 5 million to eventually catch up with Japan. The CEO says he wants to control more than 40% of the market when this happens.

     Suzuki plans to increase the number of Indian dealerships from the current 1,600 to 3,000 over the next few years. The automaker plans to establish its vehicles as "national cars" by expanding its sales network to include farming villages, places not serviced by its rivals.

     Indian car dealerships are usually quite fluid. It is common for Maruti Suzuki dealerships to suddenly switch to other brands. In a bid to resolve this uncertainty, Suzuki will offer extra support to dealerships, including the provision of premises.

     Suzuki is planning to beef up production. The automaker is trying to build a new factory by 2017 in Gujarat, the home state of Indian Prime Minister Narendra Modi, to increase its production capacity. It will finance the entire plant project.

     While Maruti Suzuki, which is 56% controlled by Suzuki with the remainder held by general shareholders, is committed to expanding sales channels, the parent company in Japan is pumping money into the new factory and providing staff to ensure it will be established quickly.

     What is most noteworthy is Osamu Suzuki's decision to remove Maruti Suzuki as the project leader, replacing it with the Japanese parent company.

     The decision needs to clear some difficult hurdles regarding Indian corporate law. Ordinary business owners would have entrusted the factory to Maruti Suzuki without much thought, based on the Indian automaker's past successes.

     But Osamu Suzuki chose the unconventional approach of paying for the new factory. The move is bold, but the CEO's past decisions have not been failure-free, one such miss caused the pending cancellation of its partnership with Volkswagen.

     But it is also true that Osamu Suzuki's wild managerial instinct has underpinned the company's character, including decisions such as entering India in the early 1980s when no one was paying attention to the country.

     Now 85, the Suzuki CEO has handed the presidency to his eldest son, Toshihiro Suzuki. The 56-year-old new president, who took over in late June, has declared that he aims for a management that draws wisdom from "Team Suzuki," rather than depending on a single charismatic figure.

     Companies often change with the times, but hopefully Suzuki will not lose the boldness that has occasionally surprised everyone.

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