Economy

Toyota, Suzuki to enter capital tie-up

Toyota, Suzuki to enter capital tie-up”

While Japan's biggest automaker Toyota will acquire a 4.94% stake in Suzuki for about 96 billion yen ($907 million), the latter will buy 48 billion yen worth of shares in Toyota, the companies said in a joint statement on Wednesday.

Suzuki boss Osamu Suzuki added: "We appreciate the kind offer from Toyota to let us make use of their hybrid technology".

"As the late Sergio Marchionne often reminded his peers, there are too many automakers doing very similar things", said Ali Izadi-Najafabadi of Bloomberg New Energy Finance's Intelligent Mobility group, referring to the Fiat Chrysler Automobiles CEO who died a year ago.

Suzuki operates in India through its subsidiary Maruti while Toyota has seen success with its SUVs like Innova in India. "If Suzuki, in the long term, is taken over by Toyota, then exchanging a small stake in each other is a good beginning or a first step". Suzuki shares are down 27 per cent this year, following a 15 per cent decline in 2018 as the Indian economy cooled.

Toyota, meanwhile, said that in June half of all its vehicles sold had an electrified powertrain - a target the car-maker originally set for itself to meet by 2025.

Suzuki is seeking to team up with a larger carmaker after an acrimonious split with Volkswagen.

The two will also work together to create a hybrid and small SUV for the Indian market and allow Toyota to rebadge the Suzuki Ciaz and Ertiga models in the Indian market and a further four cars for the African markets.

"On autonomy, it makes more sense for Suzuki to rely on Toyota because it requires a lot of time and money", Izadi-Najafabadi said.

Automakers around the globe have been joining forces to slash development and manufacturing costs of new technology.

With the tie-up, Japanese automakers will be divided into three camps - the group of Toyota, joined by Mazda Motor Corp. Subaru Corp. and Suzuki, the alliance of Nissan Motor Co., Renault SA and Mitsubishi Motors Corp. and Honda Motor Corp.

Toyota and Suzuki agreed in February 2017 to launch negotiations for a business partnership in areas such as environmental, safety and information technologies.



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