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Suzuki to raise 2007 sales 8% on overseas demand - extended

Suzuki Motor Corp., Japan's fourth-largest automaker, plans to raise sales 8% this year as overseas demand for its compact cars rises, will increase production capacity in Hungary.

The company plans to sell 2.35 million vehicles in 2007, compared with 2.17 million last year, Suzuki said in a release today. Domestic vehicle sales including minicars will fall 3% to 675,000, while overseas sales will rise 13% to 1.68 million. Chairman Osamu Suzuki will spend ¥1 trillion ($8.3 billion) for the five years ending March 2010 to expand global production, as models including the SX4 and Swift compact cars attract more buyers. The company may lose its position as Japan's biggest minicar maker in 2007 to Daihatsu Motor Co., as it trims minicar production at home to build more compacts. „It's the right decision for Suzuki to focus on more profitable models,” said Atsushi Kawai, an analyst at Mizuho Investors Securities Co. in Tokyo, who has a „neutral plus” rating on the stock. Global vehicle production will rise 9% to 2.56 million units in 2007. Domestic output will be unchanged at 1.21 million, as Suzuki increases exports 8% to 399,000 vehicles. Overseas production will rise 19% to 1.35 million, surpassing domestic output for the first time. Shares of Suzuki, based in Hamamatsu City southwest of Tokyo, gained 0.6% to close at ¥3,490 on the Tokyo Stock Exchange. Daihatsu shares fell 1.55% to ¥1,206. Domestic minicar sales are expected to fall 4% to 585,000 units in 2007, Suzuki Motor said. Daihatsu, a unit of Toyota Motor Corp., plans to raise minicar sales at home 3.3% to 620,000 units, the company said in December.

Speaking at a press conference in Tokyo today, Osamu Suzuki said he's not worried about Daihatsu replacing Suzuki as the biggest minicar maker as long as his company's total production is growing. The chairman, who turns 77 next week, also said he plans to keep his position „as long as I'm alive.” Industry-wide sales of minicars, powered by engines no larger than 0.66 liters, rose 5.2% in Japan to a record 2.02 million vehicles in 2006, according to the Japan Mini Vehicles Association. Sales may drop 3.1% to 1.96 million this year, the group said. Suzuki, which released two new minicar designs in 2006, had a 30.2% share of Japan's mini-vehicle market last year. Daihatsu, which introduced three new models, had a 29.7% market share. Suzuki plans to open a new plant next year to build only compact cars, in Sagara City, near its head office. The company has been trimming its minicar production in Japan since September.

Suzuki's production in India will probably total 710,000 units in 2007, up 13% from 630,000 units in 2006, the company said. Output will jump 38% to 220,000 units in Hungary and 20% to 120,000 in Pakistan and more than triple to 45,000 in Canada. Suzuki plans to invest over Ft 50 billion at its plant in Hungary to expand output in 2007. The company plans to create about 1,000 jobs. Magyar Suzuki expects to come forward with its next model, the Splash, in the last quarter of 2007. Suzuki Splash will be a successor to Wagon R, built on the chassis of the Swift and providing space for five passengers. Magyar Suzuki employs 4,800 people at its Esztergom plant, while its suppliers employ more than 10,000.

Suzuki Motor plans to revise its five-year business plan in the 12 months starting April 1, as the company will likely meet its sales goal of 3 trillion yen two years early, Osamu Suzuki said. Under the plan, Suzuki will increase production capacity in Hungary to 300,000 vehicles a year in 2008, from 160,000 now. The company builds the Swift and SX4 compact cars at the plant. It also supplies the SX4 to Fiat SpA, Italy's largest manufacturer. In India, production capacity will increase to 960,000 units a year by March 2010. The company owns 54% of Maruti Udyog Ltd., which makes half of all vehicles sold in India. In Pakistan, the carmaker's annual output capacity will rise to 170,000 units by March 2010.

General Motors Corp., the world's largest carmaker, in March 2006 reduced its stake in Suzuki to 3% from 20%, by selling a 17% stake to Suzuki Motor for 230 billion yen. Suzuki said at that time it would hold the 17% stake for a year to give GM the option of buying it back. Osamu Suzuki said today his company may keep the stake longer. „We agreed to keep a good long-term strategic partnership,” he said, referring to a November meeting with GM CEO Rick Wagoner. „So we don't need to stick with the deadline.” GM and Suzuki have partnerships including joint production in Canada and co-development of fuel-cell cars and gasoline-electric hybrid vehicles. GM staff helps set up and run Suzuki's dealerships in the US, Osamu Suzuki said. Suzuki Motor, which will introduce the SX4 in the U.S. this year, plans to increase the number of US dealers to 600 by 2009 from 540, Senior Operating Officer Shinzo Nakanishi said. Detroit-based GM has also sold its stakes in Japanese carmakers Isuzu Motors Ltd. and Fuji Heavy Industries Ltd. as it tries to return its North American operations to profit. (Bloomberg)