Falling Oil Prices Could Be a Boon for Suzuki's India Unit

Jan 27, 2015 03:00 PM EST | Jordan Ecarma

The falling cost of crude oil continues to make waves in markets worldwide, and Suzuki's division in India plans to benefit from the reprieve.

The biggest carmaker in the country, Maruti Suzuki India Ltd. plans to launch two or three models this year, possibly more, in an effort to grab more market share, Bloomberg reported. Suzuki's India unit competes with 18 other car manufacturers.

India's auto market has been struggling through a two-year slump, but that could change thanks to the boost from low crude oil prices and falling financing costs.

"First-time buyers are coming back to the market," Randhir S. Kalsi, chief operating officer for sales and marketing, told Bloomberg. "The economy is showing signs of buoyancy. On our part, all efforts and initiatives are being taken to increase our volumes and market share."

In October, Maruti said it was planning on two new sport utility vehicles, a crossover and a compact SUV. New offerings from Hyundai, Ford and Tata could challenge the upcoming Maruti models.

"Maruti has gained through a combination of expanding their distribution network, adding new models and offering low cost of ownership," Kapil Singh, an analyst with Nomura Holdings Inc. in Mumbai, told Bloomberg. "I would expect some further market share gains as they have a strong upcoming model lineup and plan to enter new segments."

Maruti has reached its highest market share in 10 years, taking around 45 percent, which compares with around 39 percent in 2012.

The oil market still looks weak and is being oversupplied by an estimated 1.3 million barrels a day. Globally, the market comprises 93 million barrels per day; prices may be stabilizing to around $47 to $51 per barrel, according to a Wall Street Journal report.

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