RC Bhargava, chairman of Maruti Suzuki India Ltd., speaks during a news conference in New Delhi, India (Photographer: Udit Kulshrestha/Bloomberg)

Maruti Suzuki To Pay Lower Royalty On New Versions Of All Cars, Says Bhargava

Maruti Suzuki Ltd.’s Chairman RC Bhargava said royalty payments by India’s largest carmaker to its Japanese parent would decline once all its existing models are replaced by newer versions.

When each of the new models crosses half-a-million cars or whatever the number Suzuki Motor Corp decides, the royalty will come down, he said. “It will be a maximum of 5 percent [of the net sales].”

Maruti Suzuki currently pays 5.5-6 percent to the Japanese auto giant. The maker of the Swift hatchback and Vitara Brezza compact SUV said in its earnings statement that it had revised royalty calculation terms. That will lower the outgo for new models starting with the Ignis, subject to approval by Suzuki’s board.

Bhargava said the next financial year starting April could be better for the industry. “Looking at what’s happened in the last few months, 2018-19 should be distinctly better for the automobile industry compared with the year which is coming to an end.”