VW to take 20% stake in Suzuki

• Source: Global Times
• [08:21 December 10 2009]
• Comments

Osamu Suzuki, chairman and CEO of Suzuki Motor Corp. and Martin Winterkorn, his counterpart at Volkswagen AG, the two auto companies have agreed to link arms.

German car giant Volkswagen will take a nearly 20 percent stake in Japan's Suzuki for more than $2.5 billion, giving VW a solid footprint in the Indian car market, the companies said Wednesday.

Europe's biggest carmaker, which hopes to unseat world leader Toyota, already has a strong presence in China but wants to expand its Asian reach in an alliance with the Japanese compact-car maker.

Suzuki said the 19.9-percent stake is worth about 222.5 billion yen ($2.53 billion) and that it "intends to invest up to one half of the amount received from Volkswagen into shares of Volkswagen."

The deal, set for January, comes as the recession-battered auto industry restructures, with new alliances forming to share green technology and small car designs while extending their global reach through combined sales networks.

Peugeot Citroen of France has been in talks for a stake in Mitsubishi, and the partners Renault and Nissan said last month they would launch "an ultra low-cost car" in India in 2012 to take on Tata's Nano.

Tokyo-based auto analyst Tatsuya Mizuno at Mizuno Credit Advisory said, "the alliance may accelerate a reshuffle" in the industry.

"The global auto industry was weathering the crisis and is now entering into a new stage" where strong offers of small, environmentally friendly cars will be important, Mizuno said. "For VW, Suzuki is attractive as Suzuki is strong in small-car businesses in developing countries, in particular India."

The two companies said that they "plan a joint approach to the growing worldwide demand for more environmentally friendly vehicles."

Agencies