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Suzuki bets on hybrids in India as world goes electric

Carmaker adjusts eco-car dreams to local realities

Suzuki's top-selling Dzire model on display in New Delhi.

TOKYO -- As automakers across the globe race to put fully electric vehicles on the road, Suzuki Motor is traveling a different route in the crucial Indian market with hybrids.

Suzuki began producing cars in the South Asian country back in 1983, building up its supply chain over the years via subsidiary Maruti Suzuki India. Focusing on such small, inexpensive offerings as the Alto and the Swift, it now controls 40% of the nation's new-auto market.

As the U.K., China and France talk of banning the sale of gasoline-engine vehicles, the likes of Volkswagen, General Motors and Nissan Motor have revealed their sales plans for electric vehicles one after another. But Suzuki is wagering on hybrids in India, where it has already sold the hybrid Ciaz sedan and the hybrid Ertiga minivan since 2015. Both are mild hybrids, whose electric motors are used to make the conventional engines more efficient. Regular hybrids, such as the Swift and Solio in Japan, are powered solely by the electric motors at low speeds.

Unplugged

Suzuki is steering toward hybrids for two reasons. The first is that in terms of development, Suzuki lags behind in electrics while possessing the technological know-how for hybrids.

The second is blackouts, incomplete charging infrastructure and price points for cars in India. It is hard to imagine consumers going for expensive electrics when strong sellers like the Alto cost the local-currency equivalent of several thousand dollars.

Suzuki's blueprint for India is to continue offering vehicles suited to local incomes by increasing hybrid shipments and lowering costs sustainably. At the same time, the company aims to accumulate know-how in electric vehicles by taking part in R&D efforts at a new company established by technology tie-up partner Toyota Motor.

Charging up

But calls for electric vehicles are growing louder in India as pollution becomes a social issue. Some in the government have expressed hopes of limiting new-vehicle sales to electrics by 2030 -- a goal largely seen as difficult to achieve.

But the government's desire to promote the shift toward electric vehicles is clear. The country's new goods and services tax, introduced in July, sets rates of 12% for electric vehicles and 28% for small hybrids. The government announced in September plans to procure 10,000 electric cars from Tata Motors.

Suzuki enjoys friendly relations with Indian Prime Minister Narendra Modi but has reservations about his vision of promoting the domestic auto industry by using the shift to electrics as a springboard. The automaker sees a lack of attention to consumers in New Delhi's drive for electric vehicles. Indian consumers value a balance between quality and price. "It is important to pursue products that consumers want," President Toshihiro Suzuki said.

In mid-September, Chairman Osamu Suzuki accompanied a Japanese delegation to Modi's home state of Gujarat, where he warned the prime minister that electrics may not translate to more cars made in India.

Suzuki stands out for raising up hybrids in India, the center of its growth strategy, while the rest of the world is consumed by a whirlwind of electric vehicles.

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