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News18 » Auto
2-min read

Toyota-Suzuki Formalize Their Global Partnership, To Buy Stakes of Each Other

The Toyota-Suzuki tie-up aims to manage costs and boost development. Carmakers are struggling against the rise of electric vehicles (EVs), ride-hailing and autonomous driving.

Reuters

Updated:August 29, 2019, 9:04 AM IST
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Toyota-Suzuki Formalize Their Global Partnership, To Buy Stakes of Each Other
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Toyota Motor Corp and Suzuki Motor Corp will take small equity stakes in each other, the Japanese carmakers said on Wednesday, as they seek to develop newer technologies and meet sweeping changes upending the global auto industry. The tie-up is the latest example of automakers chasing scale to manage costs and boost development. Carmakers, especially smaller ones like Suzuki, are struggling to meet the breakneck growth of an industry transformed by the rise of electric vehicles (EVs), ride-hailing and autonomous driving. Toyota will pay around 96 billion yen ($910 million) for a 4.94% stake in Suzuki, while Suzuki will acquire in the market around 48 billion yen worth of shares in Toyota. That is equivalent to 0.2% of Toyota's shares as of Wednesday's closing price, before the announcement.

The companies said in a joint statement they intended to overcome challenges facing the industry by "building and deepening cooperative relationships in new fields while continuing to be competitors". They said they would strengthen technologies and products in which each of them specialises in. The firms had said in 2016 they were exploring a partnership, citing technological challenges and the need to keep up with industry consolidation. Earlier this year they said they would produce EVs and compact cars for each other.

Automakers around the globe have been joining forces to slash development and manufacturing costs of new technology. Ford Motor Co and Volkswagen AG have said they will spend billions of dollars to jointly develop electric and self-driving vehicles. Shares of Toyota and Suzuki closed little changed before the announcement.

Toyota's Orbit

The deal brings Suzuki firmly into Toyota' orbit, alongside Daihatsu Motor Co, Hino Motors Ltd, Subaru Corp, Mazda Motor Corp and Yamaha Motor Co. Rival Nissan Motor Co has an alliance with France's Renault, although that has been shaken following the ouster of former Chairman Carlos Ghosn, and with Mitsubishi Motors Corp. Honda Motor Co has a tie-up with General Motors Co.

Toyota has been looking to expand scale in next-generation technology and said this year it would offer free access to patents for EV motors and power control units. It believes that move would help it cut by as much as half the outlays for expanded electric and hybrid vehicle components in the United States, China and Japan.

Supplying rivals would greatly expand the scale of production for hardware. Suzuki, which specialises in affordable compact cars, had been struggling to keep pace with the huge costs of investing in research and development for automated driving functions.

Toyota said in June it aims to get half of its global sales from electrified vehicles by 2025, five years ahead of schedule, and will tap Chinese battery makers to meet the accelerated shift to electricity-powered cars.

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| Edited by: Chhavianshika Singh
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