In the first official indication of what Volkswagen’s alliance with Suzuki Motor Corporation (SMC) could mean for Maruti Suzuki in India, the German automaker has said that a joint small car with Maruti is part of its discussions with Suzuki and a firm plan may emerge as early as next year.

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Last year, Volkswagen bought a 19.9% stake in SMC, which owns 54% of Maruti Suzuki India. Since the time the alliance was announced, there has been speculation about VW’s joint development of small cars with Maruti and even re-badging of some of Maruti’s existing cars such as the Wagon R and A Star (Alto), the Hindustan Times noted.

“In our discussions with Suzuki Motor Corporation, a small car, designed and developed for India, is always part of the agenda,” VW chairman Martin Winterkorn said. “Talks cover a wide variety of issues from engine to hybrids. We will perhaps have a decision for India by 2011.”

Globally, the VW group has nine brands but only three – Volkswagen, Audi and Skoda – are in India. While VW has been there for only three years, Skoda has been around for almost a decade and both share an assembly plant in Pune. However, the group remains a fringe player in India with a combined market share of a little over 2%.

“Two markets that are growing fast in the world are China and India,” Winterkorn said. “While in China we are already very strong, we need to replicate that success in India.”

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While officials from the two companies have met often in the recent past, Maruti told the Hindustan Times there were no concrete projects. “It is for Suzuki to decide and we will be called upon only for execution,” said Maruti MD and CEO Shinzo Nakanishi.

“We are a very capable small car manufacturer. VW cannot make a small car in India at the price that we do and may look into some techniques that we use,” he said earlier.