Japan’s Suzuki Motor Corporation said that its business environment in India has changed due to its declining market share and intensified competition in electric vehicles in the country, and that it needs to “rethink its strategy.”
Reviewing the current mid-term management plan (Japanese FY2021–FY2025) — (Indian FY2022 to FY2026), the management noted that the company achieved revenue and profit targets ahead of schedule, led by improved sales mix and quality and a favourable exchange rate, “even though the sales volume target could not be met.”
The company had set itself a target of 50% market share in India by FY25. However, despite the introduction of SUVs, the share has been languishing around 41.6%.
“The company actively promoted carbon neutrality initiatives, including electrification, and made progress in establishing the groundwork for growth. On the other hand, the business environment has changed due to declining market share in India and intensified competition in electric vehicles. Need to rethink strategy,” the management stated in its investor presentation.
Suzuki had set itself a target of attaining revenue of 4.8 trillion Yen by FY-25 (Indian FY26). The company had already posted revenue of 5.4 trillion Yen at the end of the last financial year. The operating margin was 8.7% against the mid-term target of 5.5%, and even the return on equity was 11.7% versus the 8% target for the mid-term.
Suzuki transitioned from the leadership of former Chairman Osamu Suzuki to a collective leadership centered around President Toshihiro Suzuki at the 155th Annual General Meeting of Shareholders on June 25, 2021.
Over the past three and a half years, former Chairman Osamu Suzuki gradually stepped back from his involvement in management. President Toshihiro Suzuki has been strengthening Suzuki's management approach without changing it and updating it to align with the evolution of the times.
Suzuki's “unchanged yet further strengthened” system is Suzuki's Operating System (OS), which consists of the “Mission Statement” and the three “Philosophy of Conduct”: Sho-Sho-Kei-Tan-Bi, Genba, Genbutsu, Genjitsu (3G), and YARAMAIKA (Entrepreneurial Spirit).
The “update in line with the evolution of the times” refers to enhancing Suzuki's management quality and competitiveness based on the 83 principles of the Corporate Governance Code, which underwent significant revisions in the same month and year as the regime transition, stated the presentation.