Suzuki Motor has announced that it is pulling out of China after dissolving its last remaining 50% stake in Changan Suzuki and having it transferred to Chongqing Changan Automobile. The decision comes as consumers in the world’s biggest car market shifted purchases to larger sedans and sport utility vehicles, reports Bloomberg. Changan will continue to make and sell Suzuki-branded cars in China under a license.

“Approximately 25 years ago, we launched the Alto in China, and since then we have made efforts in cultivating the Chinese market. However, due partly to shifting of Chinese market to larger vehicles, we have decided to transfer all equity to Changan Automobile,” company chairman Osamu Suzuki said via a statement.

Suzuki has been in China for 25 years, and the retreat marks the second big move following its exit from the US market in 2012. Suzuki was present in the US for 30 years. However, the Japanese carmaker continues to be dominant in India, which is presently one of the world’s fastest-growing major car markets. Through its local entity Maruti Suzuki, about one of every two cars sold in the country of 1.2 billion people is a Suzuki.


Suzuki Ciaz facelift in India

Compared to India (where small to mid-sized cars are preferred), the market share of small economical cars in China plunged to 6.7% last year from 35% in 2003, said Cui Dongshu, secretary general of the China Passenger Car Association. This is because in the past decade, the purchasing power of consumers in China has rapidly increased, thus the shifting demand towards larger and more spacious vehicles. According to the LMC Automotive, Suzuki sold more than 266,000 cars in China in 2014, but last year sales dwindled to around 119,000 vehicles.

Sales at the Suzuki Changan joint venture declined 27% last year, a Bloomberg Intelligence data shows. Even the introduction of the Vitara and S-Cross SUVs have done little to boost sales. However, Changan said it will fully support Changan Suzuki’s operations in China, and it will keep selling Suzuki-branded cars and provide related services. Suzuki dissolved its other Chinese venture, a 23-year-long partnership with Jiangxi Changhe Automobile, in June.

Moving forward, Suzuki aims to boost sales in its biggest market India to five million vehicles annually by 2030, said president Toshihiro Suzuki. It plans to double the line-up to 30 models in the process.