After months of denials, Volkswagen and Suzuki finally announced today that they will be pairing up. Volkswagen will buy 19.9% of Suzuki worth about $2.5 billion while Suzuki, in return, will invest about $1.13 billion of that back into shares of Volkswagen.
"I don't want you to misunderstand: Suzuki is not becoming a 12th brand for Volkswagen," Suzuki CEO Osamu Suzuki said at a press conference announcing the deal in response to a question whether the company could have a German CEO in the future. "I don't want other folks telling me how to do things.
"That isn't exactly how Volkswagen sees it, though. The company wants to overtake Toyota as the number one automaker worldwide by 2018 and would love to see Suzuki count towards that goal. Asked about that goal, Volkswagen CEO Martin Winterkorn said "If that succeeds faster (than 2018), we're happy."
"In partnership with Suzuki, the VW Group can take a big step forward in the compact car segment, particularly in the emerging markets in Asia," Winterkorn said. "In turn, Suzuki can benefit from our experience with efficient and environmentally friendly drivetrain and vehicle technologies.
"As Winterkorn alluded, Volkswagen's big gain is in Suzuki's small car expertise. While a niche player here in the U.S., Suzuki is the number 3 automaker in the Japanese market behind Toyota and Honda and its Indian partnership, Maruti Suzuki, is the leading manufacturer in that market. In both markets, Suzuki's small cars make up the bulk of its sales. Volkswagen, meanwhile, has had issues cracking into the small car market and could receive a strong boost in the Chinese market, where it is already a leader, with Suzuki-based small cars. Suzuki, meanwhile, will get access to Volkswagen's hybrid and electric vehicle technology and perhaps the company's larger vehicle platforms, traditional weak points for the Japanese automaker.
The deal essentially replaces General Motors with Volkswagen in Suzuki's corporate make-up. From 1981 until the recent financial meltdown, General Motors owned 20% of Suzuki in a similar partnership, but sold that share as it tried in vain to avoid bankruptcy. GM sold its last 3% of Suzuki shares in November of last year to raise money. CEO Suzuki characterized the new partnership with Volkswagen as "more serious" than its partnership with GM. The agreement has been finalized and cooperation between the companies will begin immediately.
Thanks to: Motor Trend
