Suzuki to pick Gujarat for new $1.3bn plant

TOKYO: Suzuki Motor will likely locate a planned new $1.3 billion passenger car factory in Gujarat, western India, Japan's Kyodo news agency said on Wednesday.

The report came two days after the company said it wanted to end its alliance with Volkswagen , a tie-up that had been expected to help Europe's biggest carmaker expand on the Indian subcontinent.

"We haven't come to a decision yet. We plan to announce the location of the plant by the end of October," Suzuki spokesman Ei Mochizuki said.

He added, however, that the automaker's chairman and CEO, Osamu Suzuki, visited Gujarat last week.

Suzuki controls about half the Indian car market through majority-owned unit Maruti Suzuki .

But Maruti Suzuki said last month it expected to post single-digit sales growth this fiscal year, a far cry from its 25-percent climb last year, as rising interest rates and prices in Asia's third largest economy force consumers to tighten their purse strings.

Car sales in India, the world's second-fastest growing major auto market after China, fell 16 percent in July, their first drop in two-and-half years, after rising a breakneck 30 percent in 2010.

Copyright Reuters, 2011