Suzuki Withdraws from Vehicle Production in China

September 5, 2018

Tokyo- Japanese automaker Suzuki Motor Corp. said Tuesday that it has agreed to dissolve its joint venture with Chinese partner Chongqing Changan Automobile Co., withdrawing from vehicle production in China.

Suzuki will sell its entire 50 pct stake in the joint venture to Chongqing Changan.

It is unusual for an automaker to withdraw from the Chinese market, where European, U.S. and Japanese companies are jockeying for a share of the world's largest auto market.

Suzuki will instead focus on India, where it controls half of the car market.

The value of the equity transfer was not disclosed.

"The transfer has almost no influence on Suzuki's financial performances for this fiscal year," the company said in a statement.

Under a licensing agreement, Chongqing Changan will continue making and selling Suzuki brand vehicles in China for the time being.

The joint venture will become a wholly owned subsidiary of Chongqing Changan. The president of the joint venture, who was sent from Suzuki, will resign.

Established in 1993, the joint venture, Chongqing Changan Suzuki Automobile Co., manufactures and sells compact cars in China. It has been struggling in recent years as compact car demand is slowing there in line with rising income levels.

In fiscal 2017, the joint venture's vehicle sales fell 27.6 pct from the previous year to some 79,000 units.

Suzuki's decision to dissolve the joint venture partly reflected a shift in the Chinese market to larger vehicles, its chairman, Osamu Suzuki, said.

In June this year, Suzuki dissolved its joint venture with another Chinese automaker, Jiangxi Changhe Automobile Co. Jiji Press