Suzuki and Volkswagen to begin work on joint projects in January 2010

Article by Christian Andrei, on August 25, 2009

Immediately after the holidays end, Suzuki Motor Corp. and Volkswagen AG will begin work on joint projects, Suzuki CEO Osamu Suzuki said last Wednesday. Suzuki, Japan's fourth-largest automaker, and VW announced a comprehensive tie-up that is set to start around January 10. Under the deal, VW will take 19.9% of Suzuki.

At the launch of the new Alto minicar in Tokyo, the Suzuki CEO said that the two carmakers have an understanding of what they want from each other. The CEO further said that actual, detailed execution will be after January. The new partners have reportedly said that as key to expanding sales in developing countries, it wants to create a competitive small car.

Indian newspaper Economic Times has quoted a top Maruti Suzuki India official to have said that VW and Suzuki may develop a small car that would cost $4,300-$5,400. Suzuki responds, saying that Suzuki Motor has authority over this, not (Indian subsidiary) Maruti.

Apparently feeling the need to explain, Maruti Chairman R.C. Bhargava said the parent company, not Maruti Suzuki, is speaking directly with VW. To clarify his comments, Bhargava said that one of the possibilities is that Volkswagen could outsource a small car from it.

Various analysts have said that to jointly develop a small, low-cost car would be beneficial to both parties. VW will have access to the expertise of profitably making small cars and Suzuki will be more cost-competitive due to the economies of scale.

Topics: suzuki, vw

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