MUMBAI -- Suzuki Motor will own all of its planned third factory in India, marking a change from existing joint operations under a local subsidiary.
The move, announced Tuesday, is aimed at strengthening production management amid intensifying competition and better managing risks unique to emerging markets in light of the 2012 worker rioting that led to the temporary shutdown of a plant.
Eased rules on investment by foreign businesses also facilitated the decision. The Japanese parent will keep a close eye on production activities and personnel management at the new plant.
New subsidiary Suzuki Motor Gujarat, to be set up in the western state of Gujarat this April, will build the factory with an investment of some 50 billion yen ($482 million). The plan is to begin operations in 2017, churning out 100,000 units a year. Volume will likely rise in stages as demand grows.
The plant will also serve as an export base to supply such markets as Europe, the Middle East and Africa. Sales operations will be handled by the existing subsidiary, Maruti Suzuki India, in which Suzuki has a roughly 56% stake.
Maruti Suzuki's investment will focus on the increasingly competitive area of sales through enhancing dealership networks and other steps, Chairman and Chief Executive Officer Osamu Suzuki told a news conference in India.
Suzuki offers the Indian market low-priced subcompacts derived from Japanese minicars, enjoying a nearly 40% share in passenger vehicles. It operates two plants near Delhi, one in Manesar and the other in Gurgaon, via Maruti Suzuki India. The 2012 rioting took place at the Manesar plant.