Toyota in final talks with Suzuki over partnership

Toyota

Two Japanese companies, Toyota Motor Corporation and Suzuki Motor Corporation have commenced formal talks to conclude their decision on early realisation of a business partnership in shared procurement, green vehicles, IT and safety technologies.

This agreement would see the company’s edge closer to a tie-up that could give Suzuki, a maker of affordable mini-vehicles and compact cars, access to Toyota’s technology.

In a recent report by Reuters, the world’s second-biggest car maker in return would benefit from Suzuki’s strong market position in India.

The companies in October said they were exploring a partnership, citing technological challenges facing automakers and the need to keep up with consolidation in the global auto industry.

Suzuki, Japan’s fourth-largest automaker, has said it has been struggling to keep pace with the speed of research and development (R&D) in the industry, a technology race that Toyota, with its greater financial clout, is better able to cope with.

Toyota invests heavily in R&D in areas, including automated driving, artificial intelligence and lower-emission cars.

Suzuki has long sought a bigger partner.

A tie-up with Volkswagen AG ended on a sour note in 2015, after the German car maker accused Suzuki of violating their pact by agreeing a diesel engine deal with Fiat.

For Toyota, access to Suzuki’s tightly knit supply chain network in India, which the automaker has cultivated since the 1980s, could help it develop and sell more mainstream cars tailored for the local market.

Suzuki dominates the Indian market through its majority stake in Maruti Suzuki India Ltd. (MRTI.NS), which sells roughly half of all cars sold in the country.

Toyota, despite years of trying, is still struggling to gain significant share in India, a country expected to be the world’s third-largest car market by 2020.

As a result of the talks, shares in Toyota closed up 0.7 per cent in Tokyo while Suzuki stock ended up 0.4 per cent.