Osamu Suzuki to step down as CEO after mileage testing scandal in Japan

Following the announcement last month that it used wrong testing methodology for its cars, Suzuki Motor Corporation (SMC) has announced that chief executive and chairman Osamu Suzuki, who has led the company since 1978, is to step down as CEO. While the long-serving Osamu Suzuki will stay on as chairman, executive vice-president Osamu Honda will retire.

With this, Osamu Suzuki becomes the third CEO among global automakers to have stepped down in recent months following a fuel/mileage-related issue. In September 2015, Volkswagen AG’s chief executive Martin Winterkorn resigned following the revelation that the carmaker manipulated US diesel car emissions tests. And last month, Mitsubishi Motors Corporation’s president Tetsuro Aikawa resigned in the wake of a fuel economy scandal. 

The change in SMC management is to be effective from June 29, 2016 after approval at the 150th Ordinary General Meeting of Shareholders scheduled on that day. In a statement issued yesterday, SMC said: “Further to the report submitted to the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) on 31st May, Suzuki Motor Corporation submitted an additional report on the details of responsibility clarifications and preventive measures today. We deeply apologise for the improper conduct in application of driving resistance, different from regulations by MLIT, and will promptly work on measures to prevent recurrence of such an incident in the future.”

Osamu Suzuki’s contribution to the automotive world is massive, having steered SMC into one of the world’s largest carmakers. India is of particular importance to SMC and Japan’s smallest carmaker grew to become India’s largest thanks to his vision and determination. 

His legendary acumen at cost control is also well known. In his address to the Indian automotive industry at ACMA’s annual convention in September 2015, he exhorted component suppliers in India to reinvest in manufacturing operations.

Later, in an interview with Hormazd Sorabjee, editor, Autocar India, he said: “The key to making a small car is to make a success of the concept of a minimum standard for cost and quality. Besides ‘Make in India’, you also require ‘Quality in India’ and ‘Cost in India’. When you make small vehicles, the profit on them is also small. The total value of the car is also less. But this is precisely the challenge one must take. If you do not take up this challenge, there are only two options – you either get into manufacturing bigger vehicles, or you manufacture a vehicle like the Nano, which is basically a rickshaw. I do not consider it an automobile. To ensure the base level of quality in the vehicle, you have to get the cost right, specifically for small cars.”

Click here to read Osamu Suzuki's full interview

Toshihiro Suzuki likely to take charge of ‘Suzuki Next 100’

It may be recollected that on July 1, 2015, Osamu Suzuki appointed his son Toshihiro Suzuki as president and chief operating officer of SMC. His stepping down will likely see Toshihiro Suzuki take over full charge of the company and drive ‘Suzuki Next 100’, SMC’s mid-term 5-year management plan which runs from 2015 to 2020. The plan is aimed at preparing the company to firmly establish itself in the global automotive arena in 2020, when it completes 100 years.

As per the Suzuki Next 100 plan, the company is looking to make Japan, India, Indonesia, Thailand and Hungary as production bases for global cars. At present, its automobile business growth is overwhelmingly centered in Japan (where it has a minicar market share of over 30% and compact car sales of over 100,000) and in India, where it commands a share of over 53% in passenger cars and 48% in passenger vehicles (cars, UVs and vans).

Develop Indonesia and Thailand as pillars that follow Japan and India, to place them as the production base for inside and outside ASEAN

The Suzuki Next 100's automobile business regional strategy plans to "develop Indonesia and Thailand as pillars that follow Japan and India, to place them as the production base for inside and outside ASEAN."   

Maruti Suzuki – the jewel in SMC’s crown

For SMC, Maruti Suzuki India is the jewel in its crown. SMC owns 56% of Maruti Suzuki India which accounted for 15.5% of SMC’s consolidated turnover. In May 2015, Maruti Suzuki became the first carmaker in India to cross the 15-million vehicle sales mark, achieving the landmark in 31 years and 5 months since it rolled out the first Maruti 800 from the Gurgaon plant way back in 1983.

In FY2015-16, Maruti Suzuki sold a total of 1,305,351 units, posting a year-on-year growth of 11.50%%. Suzuki's two-wheeler arm in India (Suzuki Motorcycle India) sold 313,300 units, down 8% year on year. 

In terms of models, SMC aims to concentrate on entry level to C-segment cars and also compact SUVs, which are seeing massive global demand. Overall, the Japanese carmaker plans to introduce 20 models globally over five years, a good number of them in India. Since August 2015, it has overseen the launch of three all-new models in the Indian market – the S-Cross and Baleno hatchbacks and the Vitara Brezza compact SUV, of which the Baleno and Vitara Brezza have turned out to be runaway successes.

Going forward, SMC's immediate goal is to get its all-new Gujarat manufacturing plant, which is slated for an early 2017 opening, going. While it will provide a much-need capacity increase to Maruti Suzuki, importantly it will be the Japanese carmaker's best plant globally. Its Suzuki Next100 management plan states that the aim is "to make new plant in Gujarat as the most evolved plant of Suzuki." 

Recommended: 

- Osamu Suzuki favours emission reduction over ban

- Interview with Toshihiro Suzuki: ‘We will be developing advanced tech with India, which will be transferred to the country in future.’