Three months after Volkswagen bought 20 per cent stakes in Suzuki Motor Corporation, the deal seems to have ruffled the feathers of one certain Japanese car manufacturer. Yes, you read it right. It may come as a late reaction from the automaker; nevertheless, Nissan has made up its mind to review the Pixo sourcing deal with Suzuki.
Nissan currently does not have a small car offering for the European market, where the crowd seems to be shifting towards more compact and fuel-efficient cars. Nissan has a deal with Suzuki under which it sources the Maruti Suzuki A-Star and sells it as Nissan Pixo in Europe.
According to Maruti Suzuki Chairman R C Bhargava, Nissan does not have a choice other than to continue the sourcing agreement as the Japanese company still does not have a replacement model for the Pixo, which is doing quite well in Europe.
“Nissan will be left without a small car if they terminate the agreement. We have had no formal dialogue with the company so far on the issue and our understanding is that the deal will continue for the entire duration, which extends till 2012,” stated Bhargava.
But, with VW coming in picture, the scene has changed.
With the help of Suzuki, VW plans to enter the small car market over the next few years and may not prefer to share its small car details, which will require huge investments with a third company.
Besides, Nissan is coming up with its own compact car for the Indian and international market, for which the production will start very soon at its Chennai plant.
Both these factors make the Nissan-Suzuki deal look very unreasonable post its completion in 2012.
Long story short: Nissan will continue to source Suzuki Pixo till the contract ends in 2012. However if Suzuki decides to discontinue the contract after 2013, because of Volkswagen, Nissan will find somebody else.
Nissan currently does not have a small car offering for the European market, where the crowd seems to be shifting towards more compact and fuel-efficient cars. Nissan has a deal with Suzuki under which it sources the Maruti Suzuki A-Star and sells it as Nissan Pixo in Europe.
According to Maruti Suzuki Chairman R C Bhargava, Nissan does not have a choice other than to continue the sourcing agreement as the Japanese company still does not have a replacement model for the Pixo, which is doing quite well in Europe.
“Nissan will be left without a small car if they terminate the agreement. We have had no formal dialogue with the company so far on the issue and our understanding is that the deal will continue for the entire duration, which extends till 2012,” stated Bhargava.
But, with VW coming in picture, the scene has changed.
With the help of Suzuki, VW plans to enter the small car market over the next few years and may not prefer to share its small car details, which will require huge investments with a third company.
Besides, Nissan is coming up with its own compact car for the Indian and international market, for which the production will start very soon at its Chennai plant.
Both these factors make the Nissan-Suzuki deal look very unreasonable post its completion in 2012.
Long story short: Nissan will continue to source Suzuki Pixo till the contract ends in 2012. However if Suzuki decides to discontinue the contract after 2013, because of Volkswagen, Nissan will find somebody else.
Great blog, really.
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