NEW DELHI: Deepening their collaboration, Japanese automakers Toyota Motor Corporation and Suzuki Motor Corporation on Wednesday said they have entered into an agreement regarding a capital alliance (the “Alliance”), wherein Toyota will purchase 4.94 per cent shares of Suzuki Motor Corp worth 96 billion Japanese yen, and the latter will buy shares worth 48 billion yen in the former.
The cross-equity holding comes at a time when the global automotive industry is undergoing a rapid transformation and smaller auto players are forming alliances with larger ones to develop breakthrough technologies.
Toyota, which is Japan’s largest automaker, had formed an alliance with Suzuki in 2017, wherein it will supply hybrid technology to Suzuki for the Indian market and abroad, and jointly produce battery for electric cars in India around 2020.
“The automobile sector is currently experiencing a turning point unprecedented in both scope and scale, not only because of the enhanced environmental regulations, but also from new entries from distinct industries and diversified mobility businesses,” the two companies said in a statement.
They added that they plan to establish and promote a long-term partnership for promoting collaboration in new fields, including that of autonomous driving.
On March 20 this year, the companies had announced that they would begin specific considerations in order to engage in joint product development and collaboration in production, in addition to promoting the mutual supply of products, by bringing together Toyota’s strength in electrification technologies and Suzuki’s strength in technologies for compact vehicles.
For Toyota, the alliance provides access to Suzuki’s expertise in India, where it owns majority stake in the country’s largest carmaker Maruti Suzuki India Limited. The capital alliance announced on Wednesday is expected to deepen the collaboration between Maruti and Toyota’s Indian subsidiary, Toyota Kirloskar Motor Ltd.
Toyota has already started selling Maruti-manufactured hatchback Baleno as Toyota Glanza and plans to sell its best-selling compact SUV Vitara Brezza under the cross-badging agreement.
Maruti, on the other hand, will sell Toyota Corolla under its brand name.
While the two firms maintain that they will continue to remain competitors, experts feel Toyota’s growing clout in Suzuki will impact the latter’s decision-making, which can further have an impact on Suzuki’s largest market — India.
For Suzuki, which earlier had a failed partnership with Volkswagen, Toyota’s strong R&D will help it to stay relevant in many markets.