Toyota and Suzuki rev up partnership talks

TOKYO • Toyota Motor Corp and Suzuki Motor Corp yesterday said they have agreed to begin formal talks aimed at forging a partnership in shared procurement, green vehicles, IT and safety technologies.

The agreement takes the two Japanese carmakers a step closer to a tie-up that could give Suzuki, a maker of affordable mini-vehicles and compact cars, access to Toyota's technology.

Toyota, Japan's biggest carmaker and the world's second-biggest, in return, would benefit from Suzuki's strong market position in India.

"Toyota and Suzuki have agreed to work towards the early realisation of a business partnership," they said in a joint press release.

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

Suzuki, Japan's fourth-largest carmaker, 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 ended on a sour note in 2015, after the German carmaker accused Suzuki of violating their pact by agreeing to 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.

"We would be happy to share lessons we learnt from our experience in India and emerging markets with Toyota if they wish, to make this a win-win partnership for both parties," Suzuki vice-chairman Yasuhito Harayama told reporters at a briefing in Tokyo after Suzuki released its earnings results for the three months ended Dec 31.

Suzuki dominates the Indian market through its majority stake in Maruti Suzuki India, which accounts for roughly half of all cars sold there, whereas Toyota, despite years of trying, is still struggling to gain significant share in a country expected to be the world's third- largest car market by 2020.

Toyota aims to double its share of India's passenger vehicle market to 10 per cent by 2025 and entry-level, no-frills cars built by small car affiliate Daihatsu will be key to achieving this goal, a company executive told Reuters earlier.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 07, 2017, with the headline 'Toyota and Suzuki rev up partnership talks'. Print Edition | Subscribe