Japanese auto giants are betting big on India—what are their strategic considerations, and can this 'new base' help them stage a comeback?

The seven major Japanese automakers are Toyota, Honda, Nissan, Mazda, Subaru, Mitsubishi Motors, and Suzuki. The first six have indeed stumbled—especially Honda and Nissan, whose merger plan collapsed amid massive losses. But here’s the twist: Suzuki hasn’t fallen—it’s surged, sharply upward. That’s precisely the kind of resilience Japanese automakers displayed during the oil crisis of the 1970s. So where’s the divergence? The truth is, Japan’s automotive giants *have* found success in India. Looking specifically at Suzuki’s latest fiscal-year report (April 2025–March 2026), its revenue reached ¥6.293 trillion—a 8% increase—while net profit hit ¥439.3 billion, up 5.6%. Excluding unit sales, Suzuki comfortably ranks second among Japanese automakers—behind only Toyota—in both revenue and net profit. By contrast, Honda and Nissan are selling more vehicles but posting deeper losses. Yet, if we dig deeper into the financials, Suzuki’s operating profit actually declined—from ¥642.9 billion to ¥622.9 billion—a 3.1% drop driven by rising costs. How, then, did net profit rise so sharply? It seems counterintuitive. This paradox lies at the heart of Suzuki’s six consecutive years of counterintuitive net-profit growth—and curiously, the very same factors dragging down other Japanese automakers’ net profits are fueling Suzuki’s gains. First, soaring U.S. tariffs severely eroded the net profits of Toyota, Honda, Nissan, and Subaru—whose U.S. exports account for 20–35% of total revenue. Suzuki, however, has no four-wheel passenger vehicle business in the U.S., so it remained unscathed. More importantly, Suzuki’s largest market is India, where it holds approximately 58% of Maruti Suzuki. In FY2025, Maruti Suzuki achieved record-high net profit and record net sales of ₹144,454 million. Under the equity method of accounting, Suzuki consolidates this profit proportionally into its consolidated financial statements—directly boosting its net profit. Moreover, amid broader geopolitical headwinds, the yen has weakened overall; thus, when Suzuki converts its overseas earnings—denominated in Indian rupees and euros—back into yen, it generates foreign-exchange gains. This non-operating income bypasses operating profit entirely and lifts net profit directly. Second, the classic formula that once served Japanese automakers so well during past oil crises has suddenly stopped working. This time, the crisis isn’t just about higher gasoline prices—it’s also about regional fuel shortages. In some areas, consumers simply *can’t* fill up, even if they can afford it. And even highly fuel-efficient Japanese cars face steep price hikes due to surging raw-material costs. As a result, traditional Japanese automakers’ decades-old gasoline-car playbook has abruptly lost relevance—leaving them with only two options: either invest heavily in R&D for new-energy vehicles, or follow Suzuki’s path—building ultra-fuel-efficient compact cars. And indeed, for Suzuki, ultra-efficiency has become a formidable, natural moat. In FY2025, Suzuki sold 725,000 units in Japan—of which 557,000 were kei cars, capturing 33.0% market share and ranking #1 for three years straight. Mini and compact car sales hit record highs in both Japan and India, reflecting a dual-engine growth strategy: ‘kei-car dominance + compact-car breakthrough.’ Finally—and most critically—the broad technological lag of Japanese automakers in new-energy vehicle development plays a decisive role. Truth be told, Suzuki is showing promising signs of progress.

India’s auto market is weakening: Maruti Suzuki’s Q3 profit falls 17%.

Editor / Huang Dalu Designer / Shi Chao Source / Reuters, Bloomberg by Satviki Sanjay Sluggish demand for small cars and deeper discounting weighed on Maruti Suzuki India Ltd.’s revenue growth in the third quarter—hitting a three-year low—and pressured its margins, sending its stock down 6%. According to a company filing released Tuesday, Maruti Suzuki’s Q3 net profit fell 17% year-on-year to ₹30.7 billion ($365 million), missing the Bloomberg consensus estimate of ₹37.1 billion. The company’s Q3 revenue rose just 0.4% year-on-year to ₹372.03 billion (approx. $4.43 billion), while its net sales stood at ₹355.891 billion—up slightly from ₹355.351 billion a year earlier. “Concerningly, growth remains confined to select segments,” said R.C. Bhargava, Chairman of Maruti Suzuki, during a media teleconference. Sales of entry-level vehicles priced at ₹1 million ($11,800) or less showed no growth. Maruti Suzuki earned fame in the 1980s for sparking India’s affordable-small-car revolution. With roughly 40% domestic market share, its weak quarterly results reflect a broader slowdown in consumer spending. High inflation and sluggish growth across multiple economic sectors have dampened sales of household goods, food & beverages, and personal-care products. Maruti Suzuki reported a 2% year-on-year decline in total India auto sales for the quarter—to 541,550 units—the first drop in over two years—driven primarily by a 13% slump in small-car sales, its largest segment, which accounts for 38% of its total vehicle sales. Weak new-vehicle demand has forced automakers to cut shipments to dealers and offer steeper discounts to attract buyers—as showrooms grapple with mounting unsold inventory. Meanwhile, heavier discounting pushed Maruti Suzuki’s Q3 EBIT margin down from 11.1% a year earlier to 10.3%.

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