The logo of Maruti Suzuki on a glass door at a showroom in New Delhi, India. Photo: Reuters

The cross-badging pact between India’s largest carmaker Maruti Suzuki and Toyota on Thursday is being seen as a win-win deal for both, though it is expected to benefit Toyota more in the short run.

Under cross-badging, partner companies share the same car or platform with minor changes to the architecture, but significant changes to the exterior and interiors.

Starting next year, Maruti Suzuki’s bestsellers – the Baleno compact and Vitara Brezza mini SUV – will sport a fresh name and a Toyota badge, while Corolla, one of Toyota’s most admired sedans, will carry Suzuki branding, reports the Times of India.

The two carmakers signed a memorandum of understanding in February 2017 for joint development of new technologies.

The deal allows both companies to address certain segments of the market where they have little presence as well as run their factories at better utilization rates. The two will also start joint sourcing for their vehicles, which will allow them to reduce costs.

The deal will have more in store for Toyota than Maruti. With Baleno and Vitara Brezza in its showrooms, Toyota dealerships will be able to garner better volumes, and more profits. With Maruti’s nationwide showroom network, Toyota is likely to improve volumes of the Corolla Altis.

Going forward Maruti can hope to benefit from hybrid and electric vehicle technology transfers from Toyota, but it will depend on India’s duty structure.

While the Indian government is keen on promoting all-electric mobility, it is not in favor of hybrid cars. Under the goods and services tax regime, electric vehicles are being taxed at 12%, whereas for hybrid cars it is a whopping 43%.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.