The Strategist

Toyota, Suzuki to explore new technologies together

02/06/2017 - 14:37

Toyota Motor and Suzuki Motor Japanese automakers announced signing of a memorandum of business partnership.

d3ims via flickr
d3ims via flickr
Together, the automakers will be exploring technologies and fostering cooperation in supply of products and components. The transaction is expected to increase number of vehicles made by Toyota and its partners to at least 18 million per year. 

Both companies have been considering possibility of partnership since October. The cooperation will also expand to the field of electric vehicles, unmanned vehicle technology, sourcing and supply of spare parts in Japan and abroad.

The companies will specify terms of co-operation later, and then will consider deepening the partnership through cross-shareholder agreements and other forms of capital.

"We want to work so that people around the world have experienced real joy of future of mobility in a society full of smiles" - said Akio Toyoda. Osamu Suzuki, in turn, promised that Toyota will not regret its decision to work with Suzuki.

As the automobile market is welcoming technology companies and non-traditional players, Toyota executives came to a conclusion that the company needs to expand partnerships with other automakers to maintain a competitive advantage. In turn, Suzuki has been looking for a strong partner after taking a decision to cease cooperation with German carmaker Volkswagen in 2015.

Companies will have to proceed with caution so as not to violate antitrust laws in the region and around the world. Suzuki and Toyota’s subsidiary Daihatsu Motor together control more than 60% of Japanese small cars market.

In October last year, Toyota and Suzuki unexpectedly announced plans to create an alliance. Since then, the companies shared with each other their problems and discussed areas of cooperation. Now, the partners signed a memorandum and agreed to "immediately" go ahead with concrete actions in various fields, such as environmental and information technology, security, mutual deliveries of products.

As it turned out, the partnership was initiated by Suzuki, "preoccupied with advanced technology development". Toyota reacted to the suggestion with enthusiasm, for what Osamu Suzuki expressed his "heartfelt gratitude". Akio Toyoda said in response that his company hopes to learn a lot from Suzuki. The alliance is aimed to promote solution of social problems and to achieve effective and sustainable development of the automotive industry. 

According to the latest data, Toyota group of companies sells annually more than 10 million vehicles and Suzuki sells 3 million cars a year.

Toyota’s subsidiary Daihatsu Motor, known for its compact cars, is nominally considered rival of Suzuki. Now that the two brands are ready for cooperation, they will try to do everything possible so that their interaction would not bring excessive interest in the antitrust authorities.

Earlier, Reuters reported that Toyota intends to increase its stake in Daihatsu Motor equity current 51.2% to a hundred percent in order to better control the business. Toyota may need the low-end brand to advance in developing markets. Most automakers have such brands which reputation can be put under risk rather easily – there are Datsun of Nissan, Dacia of Renault, Chevrolet of GM. Some markets consider Skoda as an affordable brand of Volkswagen group.