Each plans to acquire shares in the other, but remain competitors, to achieve sustainable growth
Toyota and Suzuki have announced plans to acquire a financial stake in eachother’s operations, as part of a move towards a collaborative development programme.
Toyota plans to take a 4.94% stake in Suzuki at a cost of £743.3 million for 24 million shares of common stock. Suzuki, meanwhile, will invest roughly £372 million in Toyota. The deal is awaiting approval from the foreign competition authorities.
The difference in investment amounts reflects Toyota’s inflated value; in 2018, the company became the first Japanese firm to achieve annual sales of 30 trillion yen (£232 billion), while Suzuki achieved roughly a tenth of that, at 3,871.5 billion yen (£28 billion).
A statement from Toyota read: “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 specializes and their existing business foundations.
“Specifically, to take up challenges together in this transitional era, the two companies plan to establish and promote a long-term partnership between themselves, for promoting collaboration in new fields, including the field of autonomous driving.”
In March, the two companies announced the first details of a new wide-ranging collaboration, which will involve Toyota producing Suzuki-badged hybrid vehicles based on the RAV4 and Corolla estate for the European market. The deal will include Suzuki vehicles being built at Toyota’s Derbyshire plant.
The two Japanese firms signed a memorandum of understanding to develop a partnership in 2017, and have now agreed ‘concrete details’ of the deal. The two firms say the agreement will bring together “Toyota’s strength in electrification technologies and Suzuki’s strength in technologies for compact vehicles”.
The agreement is also designed to help both firms “grow in new fields”, and will include joint collaboration in production and electrified vehicles. Toyota and Suzuki say they will “continue to fairly and freely compete against each other”.
Both firms have given details on a number of specific projects in which they will collaborate, split into three strands.
Toyota will supply its hybrid powertrain system to Suzuki at a global level, and will supply Suzuki with two new electrified vehicles based on the RAV4 and Corolla wagon for the European market. The two new models, both due on sale in late 2020, will be additions to Suzuki’s current range, rather than replacing any current model.
The Corolla-based vehicle will be built at Toyota’s Burnaston plant in Derbyshire alongside the new Corolla, with production starting in late 2020. The hybrid powertrains will be made at the firm’s Deeside engine plant. The addition of the new model is not expected to add to the 3200 people employed across the two sites.
Toyota has invested more than £2.75 billion in its UK operations, and the head of the firm’s UK manufacturing division, Marvin Cooke, said the move “demonstrates Toyota’s trust in the capability of our workforce to deliver the highler levels of superior quality products.”
He added: “Seeking to produce additional volume for other manufacturers is one example of all the efforts we are making to keep our UK manufacturing operations as competitive as they can be.”
Toyota will also adopt Suzuki’s newly developed compact vehicle engines in the European market. These engines will be manufactured at Toyota’s facility in Poland. Toyota said it was too early to determine which models would get the engines.
The two firms will work to develop hybrid vehicles for the Indian market. Suzuki will also supply Toyota with two compact vehicles based on the Ciaz and Ertiga for the Indian market, and four vehicles in the African market. In addition, Toyota and Suzuki have agreed to collaborate on the development of a C-segment SUV for India, with Toyota taking on production of the Suzuki Vitara Brezza for that market.
Toyota boss Akio Toyoda said: “We believe that the expansion of our business partnership with Suzuki – from the mutual supply of vehicles and powertrains to the domains of development and production – will help give us the competitive edge we need to survive this once-in-a-century period of profound transformation.”
Suzuki boss Osamu Suzuki added: “We appreciate the kind offer from Toyota to let us make use of their hybrid technology.”
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Source: Autocar
