Germany’s Volkswagen AG will buy a one-fifth stake in Suzuki Motor Corp for $2.5 billion
Germany’s Volkswagen AG will buy a one-fifth stake in Suzuki Motor Corp for $2.5 billion,
Under the agreement, Volkswagen will buy a 19.9-percent stake in the Japanese automaker for around JPY 222.5 billion (USD 2.5 billion) in January, making it the top shareholder.
The latest deal, confirming an earlier Reuters report, will see Suzuki invest up to half the proceeds in a cross-shareholding through the roughly 100 billion yen ($1.13 billion) purchase of a 2.5 percent voting stake in VW.
News of backing from the world’s No.3 carmaker sent Suzuki shares up 3.5 percent in a weaker Tokyo market. Volkswagen rose as much as 2.9 percent in Germany and were up 1.5 percent by 1153 GMT, the leading gainer among German blue chips.
In the first six months of 2009, Suzuki has sold 1.15 million vehicles and Volkswagen 3.265 million.
Combined that equals sales of 4.415 million, almost one million more than Toyota at 3.564 million.
Winterkorn confirmed that the top mantle was still a strong ambition of his and the company’s.
“If that succeeds faster, we’re happy.”
The deal is set to be completed by mid-February.
“Volkswagen has looked at Suzuki obviously from a small car angle,” Maruti Suzuki India chairman R C Bhargava said. He said India could become an original equipment manufacturer and supplier of small cars for Volkswagen. “It is too early to speculate on its (deal’s) implications on India (Maruti). The deal means Volkswagen and Suzuki see much value in the arrangement in terms of technology sharing,” Bhargava said. VW’s brands include Audi, Skoda and Porsche. Suzuki holds 54 per cent stake in Maruti, which contributes an estimated 20 per cent of the Japanese giant’s global revenues.
Volkswagen CEO Martin Winterkorn (right) and Suzuki chairman and CEO Osamu Suzuki attend a joint news conference in Tokyo on Wednesday.
”The important thing is to improve quality, bring down costs, standardize auto parts, and then to have a large sales number,” Suzuki Chairman Osamu Suzuki said at a joint press conference in Tokyo. Suzuki also said his company has the advantage of making small cars at low cost, while it has been lagging in developing the green technology. “We also plan to jointly develop cars for overseas markets,” he said.
But he strongly repudiated the notion that his company would become just another automaker controlled by VW.
“I don’t want you to misunderstand: Suzuki is not becoming a 12th brand for Volkswagen.
“I don’t want other folks telling me how to do things,” he said.
For his part, Volkswagen Chairman Martin Winterkorn said, “In partnership with Suzuki, the Volkswagen group can take a big step forward in the compact car segment, particularly in the emerging markets in Asia.” “Suzuki can benefit from our experience with efficient and environmentally friendly drive-train and vehicle technology,” he added. Suzuki controls nearly half of the Indian auto market, while Volkswagen is the second-biggest overseas automaker in China.
“Two of the world’s leading carmakers are joining forces and preparing to meet the growing challenges that lie ahead.
“Together we can maximise our opportunities for growth in emerging markets,” he said.
“In partnership with Suzuki, the VW Group can take a big step forward in the compact car segment, particularly in the emerging markets in Asia.
“In turn, Suzuki can benefit from our experience with efficient and environmentally friendly drivetrain and vehicle technologies,” he said.
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