TOKYO (Kyodo) -- Suzuki Motor Corp. said Tuesday it will dissolve its joint auto production venture in China, exiting from the world's biggest auto market as consumers' appetite continues to shift away from compact to large vehicles.
Suzuki, which specializes in making small vehicles, said it agreed to sell the 50 percent stake it holds in Chongqing Changan Suzuki Automobile Co. to its local partner Chongqing Changan Automobile Co. The move follows the decision in June to end another joint venture in China.
Suzuki sees little growth potential for the compact car segment in China, as more customers are looking to large vehicles with their rising incomes. The company also expects few business opportunities in the near future as the Chinese government is pushing for electric vehicles, a category in which the Japanese company has lagged behind its rivals.
"Approximately 25 years ago, we launched the Alto in China, and since then we have made efforts to cultivate the Chinese market," Osamu Suzuki, chairman of the company, said in a release.
"Due partly to a shift in the Chinese market to larger vehicles, we have decided to transfer all equity to Changan Automobile."
Suzuki sold 105,000 vehicles in China in the fiscal year ended March 2018, only a fraction of the 3.22 million vehicles it sold worldwide in the same fiscal year.
In India, it sold 1.65 million vehicles in that year, as it remains the biggest automaker in the fast-growing market.
Suzuki said Changan Suzuki, established in 1993, will continue to make and sell Suzuki-brand vehicles in China under a license and Suzuki will provide auto parts.