Maruti Suzuki India says a contract manufacturing deal is possible with the Volkswagen Group for India under a global synergy programme between its parent, Suzuki Motor Corp (SMC), and the German auto major.

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Last year, Volkswagen AG had picked up 19.9% stake in SMC and the partners have thereafter been exploring possibilities of joint production and vehicle design in India. Though several rounds of discussions and some visits to the Maruti manufacturing facilities have taken place, no concrete arrangement is in place between the 2 companies till now.

For the first time on Wednesday, Maruti MD Shinzo Nakanishi acknowledged that “there is a possibility of an original equipment manufacturing deal with VW, like the way we have with Nissan...Maybe.” He said that officials of both the companies are currently in discussions for a roadmap for global synergy. Top officials of Maruti and VW India had met in May this year to explore synergies in production and vehicle design.

But will the Nissan supply contract run parallel to a contract manufacturing arrangement with VW? Nakanishi said that with the markets in Europe slowing down, it was possible that Nissan may also scale down its demand from Maruti.

At present, Maruti supplies at least 35,000 A-Star cars (badged Nissan Pixo) to Nissan for sales in various markets across Europe. Nakanishi said it was for Nissan to decide if it will end this contract in 2011, adding “their contracts are on a yearly basis...the European market has shrunk and their orders are down for this fiscal.”