Maruti, India's top carmaker, open to partnerships to secure supply chain

By Aditi Shah

NEW DELHI (Reuters) - Maruti Suzuki is open to forming partnerships with auto part makers to secure its future supply chain and maintain its leadership position, the chairman of India's top-selling carmaker said in an interview.

Partnering with suppliers in its early years contributed significantly to Maruti's success in India, where it has 43% share of the car market, and also helped establish a supply chain for combustion engine cars, R C Bhargava told Reuters.

With growing demand for more technology in cars and a shift to 'greener' powertrains like electric and hybrid, automotive supply chains globally are changing and need large investments to keep pace.

"If required somewhere, we will get into a joint venture," said Bhargava, when asked what role Maruti would play in setting up and securing its future supply chain.

The company, though, is yet to identify specific areas for an alliance, he said.

"We have done it in the past. Maruti built a very strong supply chain because we partnered vendors and have been working with them," he said, adding that it has about 20 joint ventures with its suppliers.

Majority-owned by Japan's Suzuki Motor, Maruti dominates India's car market with its small, low-cost vehicles. But the company faces growing competition as buyers shift to bigger cars like sports-utility vehicles (SUVs) and regulators demand more safety features, pushing up costs.

Maruti is expanding its portfolio and adding more SUVs but it is behind rivals which has resulted in its market share falling to 43% from more than 50% two years ago.

Even so, the potential for small cars in India is huge, said Bhargava. Millions of people still ride motorcycles and scooters because they cannot afford a car despite its better safety profile. Once incomes rise, they will upgrade starting with small, affordable cars, he said.

"There are two markets in India now," he said referring to the small car market and one with "fancy gadgets" and SUVs.

"We'll cater to both markets. I want that Maruti continues this leadership position," said the octogenarian who has been at the company's helm for 40 years since Suzuki invested in it.

Electrification is also seen as a challenge for Maruti that wants New Delhi to incentivise all clean technologies like hybrid and ethanol that it is actively investing in, and not just EVs which it expects to launch only in 2025.

"India has to chart its own path. We cannot follow other countries," he said.

(Reporting by Aditi Shah; Editing by Christina Fincher)