Volkswagen Buys One-Fifth Stake in Suzuki

09 December, 2009 06:10:00

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German auto giant Volkswagen AG will buy 19.9 percent stake in Suzuki Motor Corp. for $2.5 billion (222.5 billion yen), two companies announced today.

Suzuki, in turn, will invest up to half of the amount received from Volkswagen in VW shares.

The alliance will encompass product development, production and sales and focus on hybrid and electric cars, Suzuki said.

"Both companies will form a long-term strategic partnership based on this which will support their successful strategies in these challenging times," the statement added.

VW and Suzuki added they would offer "a compelling solution for customers in emerging markets buying a car for the first time and also for customers in advanced economies seeking to lower their CO2 footprint while still enjoying the freedom of transport offered by an exciting range of cars" as demand continues to rise for smaller cars and for powertrains with higher fuel efficiency and lower CO2 output.

Co-operation with Suzuki, which dominates the mini-vehicle market in Japan along with Toyota-owned Daihatsu, could produce a new model for VW below its upcoming New Small Family range of cars based on the Up concept.

Suzuki has considerable expertise in small cars and small engines and is Japan's leading maker of sub-660cc minicars. It has approximately 51,000 employees and sold 2.3m vehicles and 3.1m motorcycles in the 2008/2009 financial year.

VW, with its 10 brands including Audi, Skoda, Seat and Porsche AG, is on the road to become the world's No.1 automaker.

In the first six months of 2009, Volkswagen sold 3.265 million vehicles and Suzuki sold 1.15 million. Their combined sales of 4.415 million units would be larger than top-ranked Toyota's 3.564 million.

Only a year after the Japanese automaker wrested the title from General Motors for the first time in 80 years, Volkswagen Group passed up Toyota to take the top spot producing 4.4 million vehicles, while Toyota has reportedly produced only 4 million vehicles so far this year.

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