Suzuki to lift output in China


Suzuki is looking to more than double its small-car production in China

By Alex Frew McMillan
CNN Hong Kong

HONG KONG, China -- Suzuki Motor Corp. plans to expand its car output in China, it confirmed to CNN Monday.

Suzuki expects its China output to more than double, rising 130 percent by 2005, the carmaker said.

"The market is very big in China," Suzuki spokesman Takeaki Nukii told CNN. "We have actually been producing the cars there since 1995."

Suzuki operates in China through its joint venture Chongqing Changan Suzuki Automobile Co. That's based in the city of Chongqing, where the joint venture makes Suzuki's Alto and Cultus models of small car.

China is an increasingly important market for many Japanese companies. Other producers are looking to shift production from the high-cost market of Japan nearer to China.

Weaker yuan adds to benefits

The weak Chinese yuan makes it more attractive to produce vehicles there than make them in Japan, where the yen has been on a run of strength against the dollar.

On Monday morning, it has weakened slightly to 124.34, after Bank of Japan officials intervened verbally on Friday.

Suzuki now expects to boost the production in China to 100,000 subcompact cars a year by 2005.

Production fell 11 percent in 2001 to 43,000 but has risen 35 percent in the first four months of this year, due to sale prices on the cars.

Suzuki is also looking at adding more lines at the plant in Chongqing.

Suzuki, which has its headquarters in the city of Hamamatsu southwest of Tokyo, is the largest maker of minicars in Japan, as well as its third-largest motorcycle maker, after Honda and Yamaha.

Suzuki is expanding elsewhere in Asia.

Last Thursday it took full control of its Maruti joint venture in India, from the government.

Car stocks are rising in Tokyo Monday, as the currency falls (full story). Suzuki is up 1.99 percent at 1589 yen.