Economy

Toyota, Suzuki establish a capital alliance agreement

Toyota, Suzuki establish a capital alliance agreement”

"The two companies plan to establish and promote a long-term partnership for promoting collaboration in new fields, including the field of autonomous driving".

The formation of this alliance builds on the announcement in March this year that the two Japanese companies would pool their product development and production resources, with a focus on Toyota's electrification technologies and Suzuki's strength in compact vehicles. This would lay the groundwork to engage in joint product development and production collaboration.

It was way back in October 2016 when Toyota and Suzuki signed an agreement to expand their business partnership.

With the industry bracing for changes, both partners look forward to overcoming new challenges.

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The companies have put out a joint communique that speaks of "enhanced environmental regulations ... also from new entries from distinct industries and diversified mobility businesses".

According to both Toyota and Suzuki, the objective of the capital alliance is to achive sustainable growth. The companies want to strengthen the technologies and products in which each company specialises and their existing business foundation. The announcement of the capital alliance agreement is an outcome of discussions between both companies regarding how they plan the future of the partnership pertaining to new fields. Meanwhile, Suzuki is looking to buy shares in Toyota equivalent to 0.2% ownership (about 48 JPY billion).

Japan's biggest automaker will acquire about 5 per cent of Suzuki shares for about 96 billion yen (US$907 million), while Suzuki will get a smaller holding valued at about 48 billion yen in Toyota, the automakers said in statements Wednesday. Share acquisitions will be implemented once both companies obtain approvals from foreign competition authorities.

Toyota has started exported made in India Maruti Suzuki cars like the Alto, Swift and Ciaz to markets in Africa. Toyota is expected to reciprocate with its hybrid electric vehicle technologies which will include supplying locally produced components like batteries. Once the transaction is completed Toyota will control 4.94 per cent of Suzuki's common stock. Finally, Toyota will also be rebadging the Baleno, Vitara, Brezza, Ciaz, and Ertiga in Africa.



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