Toyota, Suzuki Be­gin Talks to Drive in Win-Win Part­ner­ship...

Toyota will gain from Suzuki’s sup­ply chain, while Suzuki could ac­cess Toyota’s in­no­va­tions

The Economic Times - - Brands & Companies -

Naomi Ta­jitsu

Tokyo: Toyota Mo­tor and Suzuki Mo­tor said on Mon­day they plan to trade ex­per­tise in parts sup­plies and R&D, in an agree­ment that will aid ex­pan­sion in emerg­ing mar­kets and help them cope with rapid tech­no­log­i­cal so­phis­ti­ca­tion.

Any deal could see Toyota ben­e­fit from a sup­ply chain that has helped Suzuki dom­i­nate In­dia’s mas­sive auto mar­ket, while Suzuki could hope to ac­cess Toyota’s in­no­va­tions in au­to­mated driv­ing, ar­ti­fi­cial in­tel­li­gence and low-emis­sion ve­hi­cles.

“Toyota and Suzuki have agreed to work to­ward the early re­al­i­sa­tion of a busi­ness part­ner­ship,” they said in a joint state­ment, sin­gling out ar­eas of pos­si­ble co­op­er­a­tion such as pro­cure­ment and en­vi­ron­men­tand safety-re­lated tech­nol­ogy. They added that they saw no need to rush into a cap­i­tal tie-up. The agree­ment comes about four months after Suzuki, Ja­pan’s fourth-big­gest au­tomaker, said it was strug­gling to keep up with re­search and de­vel­op­ment (R&D) in an in­dus­try si­mul­ta­ne­ously ex­plor­ing non-petrol en­gines and self-driv­ing ve­hi­cles — ar­eas in which it has yet to an­nounce any ma­jor strat­egy.

While Toyota has the fi­nan­cial fire power to keep up with tech­nol­ogy, the world's sec­ond-largest au­tomaker has long strugg- led to win mar­ket share in In­dia where driv­ers pre­fer the type of af­ford­able com­pact cars in which Suzuki ex­cels.

“There’s a lot we can learn from the speed at which Suzuki op­er­ates and im­ple­ments changes,” se­nior man­ag­ing of­fi­cer Shigeru Hayakawa said at an earn­ings brief­ing, where Toyota also an­nounced an up­ward re­vi­sion to its full-year profit out­look.

Suzuki, through a ma­jor­ity stake in Maruti Suzuki In­dia, makes ev­ery other car sold in the coun­try thanks in no small part to a lo­cal sup­ply chain built up since the 1980s. Ac­cess to that chain could help Toyota make more cars tailored for In­dia, and pos­si­bly com­pete with Suzuki in a mar­ket widely ex­pected to be the world's third big­gest by 2020.

Toyota aims to dou­ble its share of In­dia’s pas­sen­ger ve­hi­cle mar­ket to 10% by 2025 helped by en­try-level cars from minive­hi­cle spe­cial­ist Dai­hatsu, an af­fil­i­ate wholly owned since last year which has yet to gain a pres­ence in the mar­ket, a Toyota ex­ec­u­tive told Reuters last year. “We would be happy to share lessons we learned from our ex­pe­ri­ence in In­dia and emerg­ing mar­kets with Toyota if they wish, to make this a win- win part­ner­ship for both par­ties,” Suzuki vice chair­man Ya­suhito Harayama said at a quar­terly earn­ings brief­ing on Mon­day.

Toyota is hop­ing to mine Suzuki’s know-how in low-cost de­sign which has en­abled its peer to come up with com­pet­i­tive cars priced be­low $7,000, ac­cord­ing to sev­eral com­pany in­sid­ers who have spo­ken with Reuters on con­di­tion of anonymity.

In the past, Toyota asked Dai­hatsu for help in this area but its en­gi­neers and parts pur­chas­ing man­agers have told Reuters that es­tab­lish­ing sup­ply chains from scratch which can com­pete with Suzuki’s would be highly time-con­sum­ing.

The courtship comes after Suzuki and Volk­swa­gen in 2015 ended a fraught part­ner­ship in which Suzuki accused the Ger­man au­tomaker of want­ing to bring its un­der its con­trol, while VW ob­jected to Suzuki's pur­chase of diesel en­gines from Fiat in­stead of its own.

Some an­a­lysts have ques­tioned whether the lat­est part­ner­ship could see Suzuki com­pro­mise its dom­i­nance in In­dia, along with its in­de­pen­dence. “(Suzuki) needs ac­cess to tech­nol­ogy, but would that mean giv­ing up be­ing an in­de­pen­dent com­pany?” CLSA man­ag­ing di­rec­tor Chris Richter said. “I think that’s a price too high for Suzuki at the mo­ment.” — Reuters

FILE PHOTO/REUTERS JOIN­ING HANDS: Toyota Mo­tor pres­i­dent Akio Toy­oda (left) and Suzuki Mo­tor chair­man and CEO Osamu Suzuki

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