Toyota and Suzuki form a capital alliance

Toyota and Suzuki form a capital alliance

28 August 2019

Japanese carmakers Toyota and Suzuki are forming a capital alliance to accelerate technological development and stay ahead in a changing automotive landscape.

The two companies will each purchase a stake in the other, with Toyota paying ¥96 billion (€818.4 million) for 5% of shares in smaller Suzuki, while they will spend ¥48 billion (€409.2 million) on around 0.2% of shares in the bigger manufacturer.

The carmakers will use the alliance to promote the development of new technologies, including autonomous systems, a joint statement says. A partnership between the two has been explored since 2016, citing technological challenges and the need to keep up with industry consolidation.

In March this year, Toyota and Suzuki announced a strategic collaboration, with Suzuki gaining access to Toyota's established hybrid system and will use the larger company's platforms to build two new electrified vehicles. Suzuki will share its compact platform, allowing the larger business to build two small cars for the Indian market.

New technologies

′The automobile sector is currently experiencing a turning point unprecedented in both scope and scale, not only because of enhanced environmental regulations but also from new entries from distinct industries and diversified mobility businesses,' the statement reads.

The two companies intend to achieve sustainable growth by overcoming new challenges surrounding the automobile sector by building and deepening cooperative relationships in new fields while continuing to be competitors, in addition to strengthening the technologies and products in which each company specialises and their existing business foundations.

′The execution of the capital alliance agreement is a confirmation and expression of the outcome of sincere and careful discussions between the two companies, and it will serve for building and promoting their future partnership in new fields,' they add.

The share acquisitions will be implemented after the companies obtain approvals from the foreign competition authorities.

Suzuki said it would use ¥20 billion (€170.5 million) of the proceeds on development of new technologies including autonomous driving, and the remainder to replenish its capital.

Japanese partnerships

Toyota has been looking to expand scale in next-generation technology and said this year it would offer free access to patents for EV motors and power control units. It believes that move would help it cut by as much as half the outlays for expanded electric and hybrid vehicle components. The company will also offer access to its patents on hydrogen technology.

The carmaker also took a 5% stake in Mazda during 2017 as part of an alliance that will see the companies build a US assembly plant and work together on the development and production of electric vehicles (EVs).

The tie-up is the latest example of manufacturer collaboration, an ongoing trend in the automotive industry as carmakers look to develop new technologies while cutting back on costs.