Toyota will acquire 2.4 crore shares of common stock in Suzuki for 96 billion yen, while Suzuki plans to acquire shares in Toyota equivalent to 48 billion yen.

Toyota and Suzuki to strengthen alliance by acquiring stake in each other
Money Auto Industry Thursday, August 29, 2019 - 19:17
Written by  S. Mahadevan

In a strategic move, two Japanese automobile companies, Toyota and Suzuki will pick up stakes in each other’s company. This is being done to strengthen their alliance in light of the overall environment in the industry that calls for joint efforts to fend off threats of different nature.

Under this agreement, Toyota Motor Corporation will buy 2.4 crore shares (common stocks) of Suzuki Motor Corporation. This is being valued at ¥96 billion (roughly Rs 6510 crore). Suzuki will receive Toyota shares of half this value, that is ¥48 billion.

This is not the first time the two companies are announcing a tie up. Earlier this year, Toyota and Suzuki made public their intentions to make use of each other’s strengths to each other’s benefit. Thus, Suzuki could offer Toyota its products in the compact vehicle segment while Toyota could pass on the work it has carried out in developing the electrified automobiles. There could be some joint development and even production collaboration where vehicles of one brand could be assembled in the factory belonging to the other.

In the Indian context, for example, Suzuki’s models Baleno and Vitara Brezza will be made in Toyota’s plant from 2022 while the Ciaz and Ertiga models will be supplied to Toyota. Toyota is expected to reciprocate with its hybrid electric vehicle technologies which will include supplying locally produced components like batteries.

Where Toyota has export potential in markets like Africa, Suzuki’s four models listed above will be supplied by Suzuki for export by Toyota.

The companies have put out a joint communique that speaks of “enhanced environmental regulations … also from new entries from distinct industries and diversified mobility businesses”. This can only mean the initiatives by many governments to encourage electric vehicles and the ride-share mobility solutions that discourage people from buying and owning cars since they are there to offer the solutions for mobility. The joint plans will include the autonomous driving technologies as well.

In terms of geographies, India, Africa and Europe are seen as the markets where this alliance will focus on to begin with.

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