Toyota, Suzuki to trade expertise
• Toyota will benefit from a supply chain that has helped Suzuki dominate India, while Suzuki could access Toyota’s innovations
Toyota and Suzuki are planning to trade expertise in parts supplies and research and development in a deal that will aid expansion in emerging markets and help them cope with rapid technological sophistication.
Toyota and Suzuki are planning to trade expertise in parts supplies and research and development in a deal that will aid expansion in emerging markets and help them cope with rapid technological sophistication.
The deal could see Toyota benefit from a supply chain that has helped Suzuki dominate India’s 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 towards the early realisation of a business partnership,” they said in a joint statement, singling out areas of possible co-operation such as procurement and environmentand safety-related technology.
They said they saw no need to rush into a capital tie-up.
The agreement comes about four months after Suzuki, Japan’s fourth-biggest vehicle maker, said it was struggling to keep up with research and development in an industry exploring nonpetrol engines and self-driving vehicles — areas in which it has yet to announce any significant strategy.
While Toyota has the financial firepower to keep up with technology, the world’s secondlargest vehicle maker has long struggled 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 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 aimed to double its share of India’s vehicle market to 10% by 2025, helped by entrylevel cars from mini-vehicle specialist Daihatsu, an affiliate wholly owned since 2016, a Toyota executive said in 2016.
“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 winwin partnership for both parties,” Suzuki vice-chairman Yasuhito Harayama said 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 spoke on condition of anonymity.
In the past, Toyota asked Daihatsu for help in this area, but its engineers and parts purchasing managers said that establishing supply chains right from scratch that could compete with Suzuki’s would be highly time-consuming.
The courtship comes after Suzuki and Volkswagen (VW) ended a fraught partnership in 2015 in which Suzuki accused the German car maker of wanting to bring it under its control, while VW objected to Suzuki’s purchase of diesel engines from Fiat instead of its own.
Some analysts have queried 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 MD Chris Richter said, adding this was a “price too high”.
Japanese exporters have enjoyed a boost since Donald Trump’s election as US president, with the yen weakening on expectations his big-spending, tax-cutting agenda would fire inflation and force the Federal Reserve to hike interest rates.
A weaker yen boosts exporters’ bottom lines by making their products less expensive overseas, while inflating the value of their earnings abroad when repatriated.
The Japanese vehicle industry faces uncertainty over Trump’s drive to support US firms over foreign imports, a stance that has raised fears of a possible global trade war. He has targeted Toyota with strong criticism of its project to build a new factory in Mexico.
JAPANESE EXPORTERS HAVE ENJOYED A BOOST SINCE DONALD TRUMP’S ELECTION, WITH THE YEN WEAKENING
“It is difficult to forecast the impact of the Trump administration at this time,” Toyota executive Tetsuya Otake said.
Stiff competition at home and abroad has pushed some Japanese car makers to eye tieups. Nissan last year bought a one-third stake in Mitsubishi Motors, forging an alliance that will challenge some of the world’s biggest vehicle groups.
Nissan is to announce its nine-month results on Thursday, while Honda said its net profit for the period jumped 18.9% as it upgraded its full-year forecasts.