Suzuki to marry Fiat?

Big news are coming from India. After months of speculations about possible Asian partners for Fiat, Bloomberg news had announced today the possible alliance between Fiat and Suzuki. According to the site, after Fiat’s decision to split its sales operations from Tata, the situation is different now for Italians and their intentions to increase their presence in Asia. At the begining of May/12 Fiat decided to stop sharing car dealers with Tata for the sale of its Punto, Palio and Linea. At the same time, in Turin, Mr. Ratan Tata, Tata’s CEO, stoped being part of Fiat’s board after six years doing it. In the other hand, Suzuki is still fighting to get back the 20% of shares owned by VW, after some problems between them. In other words, both companies, Fiat and Suzuki, are not feeling comfortable with their current partners and after a divorce, a second marriage can be an option, especially in their case: they have working together since 2006 sharing engines and one model.

Fiat Sedici / Suzuki SX4. Photo by netcarshow.com

Certainly, Suzuki would be the perfect candidate for Fiat. It has an important presence in Asia, a continent where Fiat-Chrysler Group is pretty unknown. Italians know that for becoming really global, Asia must have an important place in terms of units sold. Last year, this continent represented just 3% of group’s global sales. By markets, India was the largest one for Fiat: 16.730 units sold (-23% year on year, and 0,7% of market share). Then comes Japan, where the small 500 is a bit popular: 13.425 units and 0,3% of market share. India represents 40% of Fiat Group’s Asian sales, while Japan 32%. Tiny presence in China, Southeast Asia and Korea. The opposite situation comes when looking at Suzuki’s numbers: more than 450.000 cars sold in Japan (is the best selling Kei cars brand) and 1 million in India with 41% of market share! They are also strong in Indonesia, and in China, where they sold around 300.000 cars in 2011.

Suzuki Maruti Ertiga. Suzuki’s latest product in India, where they control 41% of the market

Those numbers would fit perfectly in Fiat’s idea of increasing its presence in Asia. It is with no doubt world’s most important market, but to get an important market share, a car manufacturer like Fiat needs big investments that would become easier to make with a big guy from the region. In the other hand, Suzuki needs to expand its business in other emerging markets such as Latin America, where its presence is marginal and where Fiat is strong. It is also important to mention that both companies would benefit from an alliance not only in terms of geographic fit but also in terms of core business: both are specialized in small cars and are very well known for the efficient city cars. This would allow them to share not only engines as they do now, but also future platforms and increase their offer in A, B and C segment. In other words, an alliance Fiat-Chrysler-Suzuki would generate a very important global player with big presence in world’s main markets: China, USA, Japan, India, Brazil and Europe. What are they waiting for?