Maruti Suzuki India today said it had decided not to use Toyota Kirloskar’s factory in India to manufacture Vitara Brezza, also sold as Toyota Urban Cruiser in India.
An agreement was announced in March last year in which the two companies announced that Maruti Suzuki will supply Baleno to Toyota in India. At the same time, the two companies also agreed that some of the production of mini-SUV Vitara Brezza, which was a hot-selling model at that time, will shift to Toyota Kirloskar’s India plant. Some of the units produced there will be sold under the Toyota brand in India.
Toyota did announce the launch of Urban Cruiser — based on Vitara Brezza — two months ago, but without any plans to manufacture the same at its own plant.
ENTER THE KIA
Between the time when then agreement was announced and Urban Cruiser hit the market in October, the Indian auto market has undergone almost revolutionary changes that have increased competition in the mini/compact SUV market, hurting the sales of Vitara Brezza.
The most important cause for the disruption has been the extremely successful entry of Korean manufacturer Kia Motors into India. The company, with just two models, has seized substantial market share in the compact SUV/hatchback market, increased competition and dampened sales projections for Urban Cruiser and Brezza.
Kia’s two models — Sonet and Seltos — are priced in the Rs 7 to 12 lakh price segment, and have been smash hits.
The Korean carmaker sold a whopping 11,417 units of its Sonet hatchback/mini-SUV in November, and 9,205 units of its compact SUV Seltos.
In comparison, Maruti Suzuki was able to sell only 7,838 units of Brezza during the month. The sales number for Urban Cruiser are not available, but they are likely to be in the 2,000 unit range.
To make matters worse, Hyundai’s Venue, which was launched two months after Maruti Suzuki and Toyota Kirloskar announced their partnership, has also done better than Vitara Brezza, and clocked sales of 9,265 units in November.
The sea-change in the mini/compact SUV market seems to have given pause to Maruti Suzuki and Toyota Kirloskar’s plans to augment the production of Brezza at the latter’s plant near Bangalore.
On its part, Maruti Suzuki said the company’s board has decided to allocate the capacity available under its agreement with Toyota Kirloskar to manufacture “another model”, without specifying which.
“The Board has, today, approved to change the model to be manufactured at TKM from Vitara Brezza to another model,” was all it would say.