Two major car manufacturers in India, Toyota Motor Corp and Suzuki Motor Corp have signed a cross badging agreement, under which, both companies have agreed to produce cars for each other in the country.

On Thursday, Toyota India and Suzuki India announced that they have signed a cross-badging agreement under which the Japanese automobile majors will manufacture vehicles for each other in the Indian market. Cross-badging means, both companies will supply of hybrid and other vehicles to each other and vehicles made by Suzuki will be rebranded and renamed as Toyota cars, while the Toyota vehicles will sport the Suzuki badge. Suzuki will supply premium hatchback Baleno and compact sports utility vehicle Vitara Brezza to Toyota, which will sell those under its own brand through its subsidiary in India.

Whereas, Toyota will supply its executive sedan, Corolla, to Suzuki to be sold through local unit Maruti Suzuki. The deal allows both companies to address certain segments of the market where they have no or insignificant presence in India as well as run their factories at better utilisation rates. Toyota and Suzuki will also start joint sourcing for these vehicles, which will allow them to reduce cost. The cross-badging deal is especially beneficial for Toyota, which is aiming to boost its presence in India as analyst believe that the arrangement would help Toyota expand its presence in market where it has struggled to grow sales due to lean demand for its lower-cost models.

For Toyota, Indian market has been a blemish – considering its incredible presence in rest of the world. So by selling rebadged and slightly changed Balenos and Vitaras, Toyota can bolster its distribution network and move more towards expanding its market share. The manufacturing of these rebadged car will begin by mid-2019 and it will deepen both companies’ partnership which will enable Suzuki to tap into Toyota’s R&D firepower to develop lower-emission vehicles and self-driving cars – areas which Suzuki has admitted it is struggling to keep up with.

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