Suzuki will dissolve its last remaining automobile manufacturing partnership in China, Nikkei Business reported. According to the report, Suzuki and Chongqing Changan Automobile will disband their joint venture, with the Japanese company selling its stake to the local partner, citing people familiar with the matter.
The process will start upon approval from Chinese authorities and could be completed by year end, with Changan continuing to make Suzuki-brand vehicles under license, according to Nikkei.
Suzuki spokesman Satoshi Kasukawa declined to comment specifically on the report but said Suzuki’s stance has not changed and it continues to discuss with Changan about future growth of the partnership.
Earlier in June 2018, Suzuki dissolved its other Chinese venture, a 23-year-long partnership with Jiangxi Changhe Automobile. Japan’s national broadcaster NHK reported back then, that Suzuki had started negotiations about ending its 25-year tie-up with Changan. Suzuki denied the report at the time, saying it was talking to its Chinese partner about future strategies.
However it was already predicted that in a few years, Suzuki will completely retreat from China. Suzuki has been continuously suffering from dismal sales in the world’s largest automobile market since several years.
In China, Suzuki products have been experiencing sales downturn since 2011. In 2016, its annual deliveries reached only 115,000 units, nearly half versus the sales of 220,000 units in 2011. Furthermore, the annual deliveries kept declining to 86,000 units last year, slumping 25% from the previous year as well. In the first quarter this year, the automaker delivered a total of 13,000 vehicles with a sharp year-on-year drop of 55.7%. Particularly, its monthly sales nosedived 67.3% from a year ago with only 4,843 vehicles delivered in March.
The Suzuki sales figure in Chinese market look even worse when you put them against some successful automakers out there. Suzuki stood at 41st place in China according to the number of units sold in 2017 and hold a 0.49% market share in world’s largest automobile market.
Suzuki sold a total of 118,706 units in 2017, whereas 8 automakers in China posted figures well above 1.0 million units in the same year. Suzuki’s total sales in 2017 are almost equal to the 2 month sales of Hongguang MPV owned by GM-Wuling which sells at an average of 45,000 units a month!
Looking back at year 2012 when Suzuki retreated from the US market, some analysts had pointed out that the Japanese automaker might also lose its market share in the Chinese automobile market, and it has proved to be right.
After an exit from China, Suzuki will focus its attention on Maruti Suzuki in India, which is its most lucrative market, and all that Suzuki may have. Suzuki has a minuscule presence in Europe and in its home market Japan, as the company is facing a prolonged slowdown and cutthroat competition from Daihatsu in the mini-car segment.