Toyota, Suzuki to acquire stake in each other, strengthen alliance

Japanese auto majors Toyota Motor Corporation and Suzuki Motor Corporation on Wednesday said they will acquire stake in each other as they seek to strengthen their alliance.

As part of a capital alliance agreement, Toyota will acquire 2.4 crore shares of common stock in Suzuki (4.94 per cent stake) for 96 billion yen (over Rs 6,510 crore), while Suzuki plans to acquire shares in Toyota equivalent to 48 billion yen (around Rs 3,255 crore).

On October 12, 2016, the two companies had first announced their business partnership.

In March this year, they agreed to engage in joint product development and collaboration in production, in addition to promoting mutual supply of products by bringing together Toyota's strength in electrification technologies and Suzuki's strength in technologies for compact vehicle.

Elaborating on the reasons for their capital alliance, Toyota and Suzuki in a joint statement said that the automobile sector is currently experiencing a turning point unprecedented in both scope and scale, not only because of enhanced environmental regulations but also from new entries from distinct industries and diversified mobility businesses.

"The two companies intend to achieve sustainable growth by overcoming new challenges surrounding the automobile sector by building and deepening cooperative relationships in new fields while continuing to be competitors, in addition to strengthening the technologies and products in which each company specialises and their existing business foundation," they said.

Toyota and Suzuki will jointly take up challenges together in this transitional era and plan to establish and promote a long-term partnership for promoting collaboration in new fields, including the field of autonomous driving, the statement added.

"The execution of the capital alliance agreement is a confirmation and expression of the outcome of sincere and careful discussions between the two companies, and it will serve for building and promoting their future partnership in new fields," it said.

As part of their earlier pact, the two partners had agreed to extend their collaboration to Europe and Africa over and above their partnership in India.

Suzuki will supply Ciaz sedan and Ertiga multi-purpose vehicle to Toyota in India in addition to the already agreed supplies of premium hatchback Baleno and compact SUV Vitara Brezza, which will be rolled out from Toyota's plant in India from 2022.

Moreover, Suzuki will also supply its India-produced vehicles -- Baleno, Vitara Brezza, Ciaz, Ertiga -- to Toyota for the African market as well.

Toyota, on the other hand, will provide Suzuki its hybrid electric vehicle (HEV) technologies in India through local procurement of HEV systems, engines and batteries, while also supplying THS (Toyota Hybrid System) to Suzuki in global markets.