Osamu Suzuki to step down as Suzuki CEO over fuel economy scandal

Following the announcement last month that it used wrong testing methodology for its cars, Suzuki Motor Corporation (SMC) has announced that CEO and chairman Osamu Suzuki, who has led the company since 1978, will step down as CEO. While Osamu Suzuki will stay on as Chairman, executive vice-president and chief technical officer Osamu Honda will retire.

The change in management is to come into effect from June 29, 2016, after approval at the annual shareholders meeting scheduled on that day. In a statement issued yesterday, SMC said: “We deeply apologise for the improper conduct in application of driving resistance, different from regulations by MLIT, and will promptly work on measures to prevent recurrence of such an incident in the future.”

The Japanese carmaker recently admitted to fudging fuel-efficiency claims for some of its cars sold in Japan. 16 of the carmaker's models on sale in Japan came under scrutiny for improper fuel-efficiency claims, which include cars like the WagonR, S-cross, Swift and the Made-In-India Baleno. Suzuki stated that this impacts the cars sold in Japan only and not Suzuki’s overseas markets. In April 2016, Mitsubishi had also confessed to tampering with fuel test figures of cars sold in Japan. The move affected around 6,25,000 Mitsubishi-made cars, including those produced for Nissan. 

Osamu Suzuki’s contribution to the automotive world is massive, having made SMC one of the world’s largest carmakers. India is of particular importance to SMC and Japan’s smallest carmaker grew to become India’s largest thanks to his vision and determination.  His legendary acumen at cost control is also well known.

In his address to the Indian automotive industry at ACMA’s annual convention in September 2015, he exhorted component suppliers in India to reinvest in manufacturing operations. Later, in an interview with Hormazd Sorabjee, editor, Autocar India, he said: “The key to making a small car is to make a success of the concept of a minimum standard for cost and quality. Besides ‘Make in India’, you also require ‘Quality in India’ and ‘Cost in India’. When you make small vehicles, the profit on them is also small. The total value of the car is also less. But this is precisely the challenge one must take...To ensure the base level of quality in the vehicle, you have to get the cost right, specifically for small cars.”
 

Toshihiro Suzuki to take charge of ‘Suzuki Next 100’

On July 1, 2015, Osamu Suzuki appointed his son Toshihiro Suzuki as president and chief operating officer of SMC. His stepping down will likely see Toshihiro Suzuki take over full charge of the company and drive ‘Suzuki Next 100’, the company's mid-term five-year management plan which runs from 2015 to 2020. The plan is aimed at preparing the company to firmly establish itself in the global automotive arena in 2020, when it completes 100 years.

As per the plan, the company is looking to make Japan, India, Indonesia, Thailand and Hungary as production bases for global cars. At present, its automobile business growth is overwhelmingly centred in Japan (where it has a minicar market share of over 30 percent and compact car sales of over 1 lakh) and in India, where it commands a share of over 53 percent in passenger cars and 48 percent in passenger vehicles (cars, UVs and vans).

The jewel in SMC’s crown

For SMC, Maruti Suzuki India is the jewel in its crown. SMC owns 56 percent of Maruti Suzuki India which accounted for 15.5 percent of SMC’s consolidated turnover. In May 2015, Maruti Suzuki became the first carmaker in India to cross the 15-million vehicle sales mark, achieving the landmark in 31 years and 5 months since it rolled out the first Maruti 800 from the Gurgaon plant 1983. In FY2015-16, Maruti Suzuki sold a total of 1,305,351 units, posting a year-on-year growth of 11.50 percent.

Suzuki's two-wheeler arm in India (Suzuki Motorcycle India) sold 3,13,300 units, down 8 percent year on year. 

In terms of models, SMC aims to concentrate on entry-level to C-segment cars and also compact SUVs, which are seeing massive global demand. Overall, the Japanese carmaker plans to introduce 20 models globally in five years, with a good number to head to India. Since August 2015, it has overseen the launch of three all-new models in the Indian market – the S-cross and Baleno hatchbacks and the Vitara Brezza compact SUV, of which the Baleno and Vitara Brezza turned out to be runaway successes.

Going forward, SMC's immediate goal is to get its all-new Gujarat manufacturing plant, slated for an early 2017 opening, going. In addition to providing a much-need capacity increase, it will be the Japanese carmaker's best plant globally. As per the 'Suzuki Next 100' plan, the aim is "to make new plant in Gujarat as the most evolved plant of Suzuki."