Suzuki Motor Corp. CEO Osamu Suzuki, 69, runs his company almost as a one-man show. He is involved personally in everything from touring his plants in search of cost-cutting ideas, to negotiating deals to build cars in India.
His methods work. Suzuki the carmaker is a small player in the U.S. market, but a major presence on the world stage. Globally, it builds more cars than Mitsubishi, Mazda, Daewoo or Hyundai.
Late last year, General Motors hiked its stake in Suzuki from 3.2 percent to 10 percent. GM wants to tap Suzuki for small, affordable cars for developing markets in Asia and elsewhere. At this fall's Tokyo Motor Show, Suzuki and GM unveiled the YGM-1, a concept car based on a Suzuki platform that could be built in any of Asia's markets, from Japan to China, Australia to Vietnam.
Suzuki met with Asia Editor James B. Treece at the carmaker's Tokyo branch office last week. Edited excerpts:
You have had a long relationship with GM. How has that relationship changed since GM raised its stake in Suzuki to 10 percent?
In 1981, GM's thinking was the same as Suzuki's: Make small cars for the American market. We were only thinking of America. In raising the stake to 10 percent, we were thinking not just of America, but of the world.
The joint program in Europe, involving the plants in Poland and Hungary, was started before the increase in the equity stake. But now, we're planning even beyond Europe - worldwide. For example, GM's operation in Argentina. It will build Suzuki vehicles. And, for the first time, we will buy a stake in a GM operation. (Suzuki will buy 2 percent of the Argentine subsidiary.)
In any country where GM has an operation, we could build a Suzuki vehicle.
There has been talk of building the YGM-1 concept car or one like it in a Suzuki plant in Japan. Do you have the capacity available in your plants?
We're at full production now. We don't have any capacity right now.
Looking at it from a worldwide perspective, whether to build it in Japan or outside Japan is not the issue.
As long as it's a plant that is No. 1 in quality and cost, we could build it in any plant, in any country in the world. Anywhere would be fine. As long as the quality and cost are there, I would not oppose building it anywhere.
Let the plant with the best quality and lowest cost raise its hand. Wouldn't that be best?
And Suzuki might raise its hand, too. As for the capacity problem: Yes, our capacity is full right now, but we don't know if it will be full in two years. So I don't worry about capacity so much.
Have you decided whether to go ahead and build the YGM-1?
That's still ahead of us.
Next year, you will launch a car developed jointly with GM's Opel unit. What's the next step for your cooperation there?
We like to properly complete one step before taking the next.
In January, we will start sales of a car that Opel will be building at its plant in Poland and we will be building at our plant in Hungary. We want the launch to go smoothly, according to plan. That's our top priority.
After that, there are various possibilities.
Marketing will be separate, right?
Completely. The Suzuki car will use a Suzuki engine, and the Opel car a GM engine. Distribution will be completely different.
So far this year in the United States, you've sold about 12,500 cars and 28,900 light trucks. Do you really need to sell cars in the United States?
In a market dominated by major makers like the U.S. market, Suzuki cannot survive with a broad lineup. We have to offer niche vehicles.
But Isuzu dropped cars and went only with trucks. It wouldn't be that bad, would it?
If we went to commercial vehicles only, it would be a difficult setup for the dealers. And there's GM. ...
But CAMI, the joint GM-Suzuki assembly plant in Canada, will be shifting to not a commercial vehicle, but a sport-utility...
Well, passenger cars only would be difficult. Selling only SUVs or light trucks might be possible, I suppose.
You're not considering doing that?
No, I'm not considering that.
In small cars, Ford of Europe and Mazda are rivals. So their relationship is not that good.
Aren't you sort of a rival to Opel in small cars? They used to be the international small-car experts, and now GM is pointing to Suzuki as being its center of expertise in small cars. How does Opel feel about that?
Probably not very good. But as long as we're not going to be going into Europe that much, it's not a problem. If we're outside of Europe, it's OK.
In fact, the version of the car that we jointly developed that is to be built in Poland originally was going to have a Suzuki engine. But Opel people in Germany said, 'Hey, we should have our own engine in it.' So that is not good.
What is your forecast for the Japanese car market in 2000 and 2001?
We are specialists in minivehicles (cars and trucks with engines smaller than 660cc). So I won't address the total market.
Looking just at the minivehicle market, however, in the fiscal first half from April to the end of September this year, sales were just over 900,000. That was up about 32 percent. But in the second half, from October to March 2000, I expect sales to be down about 10 percent to around 870,000. That would bring the full fiscal year total to roughly 1.78 million. Sorry, but I look at it in terms of the fiscal year, not the calendar year.
From April 2000 to the end of March 2001, I believe we'll see another 10 percent drop to about 1.6 million. From fiscal 1998 to fiscal 1999, it rose about 20 percent, so I wouldn't be surprised to see it drop 10 percent a year for three years.
So far in 1999, minivehicles have risen to about 32 percent of all vehicle sales in Japan. When will they peak?
I think this is the peak.
The market is splitting between cars in the (Toyota) Crown and (Nissan) Cedric large class, and those in the (Toyota) Vitz small class. This split will continue. You'll have large cars like the Crown, and the small, 1.0- to 1.2-liter class cars like the Vitz. As those two segments rise, I think that minivehicles will return to their prior level of around 25 percent of the market.
Suzuki's share of the minivehicle market has slipped a bit this year. What will you do to reverse that?
In this business now, we're all trying to grab the top share. We're all together in that race.
For 26 years, Suzuki was the top minivehicle maker. The other makers weren't that healthy. Beginning with Daihatsu, the other makers have been more vigorous recently. From now on, we'll have a real competition for the top spot. We welcome them all.
What will determine the winners?
It comes down to retaining your customers. There are a total of 18 million minivehicles on the road in Japan. Of those, 5.6 million carry our 'S' mark. Daihatsu has 4.5 million. After that: Mitsubishi 3.0 million; Subaru 2.3 million; Honda 2.5 million; Mazda, 0.6 million. Total: 18 million.
Why are Mitsubishi and Subaru falling? They're selling few replacement vehicles. Since we revamped our entire lineup, what customers are we selling to? Owners of old Suzuki minivehicles who come in and look at the new models. If you don't retain those customers, you'll lose sales.