Toyota, Suzuki courtship intensifies as partnership talks begin

Mon Feb 6, 2017 8:31am EST
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By Naomi Tajitsu

TOKYO (Reuters) - Toyota Motor Corp (7203.T: Quote) and Suzuki Motor Corp (7269.T: Quote) said on Monday they plan to trade expertise in parts supplies and R&D, in an agreement that will aid expansion in emerging markets and help them cope with rapid technological sophistication.

Any deal could see Toyota benefit from a supply chain that has helped Suzuki dominate India's massive auto 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 toward the early realization of a business partnership," they said in a joint statement, singling out areas of possible cooperation such as procurement and environment- and safety-related technology.

They added that they saw no need to rush into a capital tie-up.

The agreement comes about four months after Suzuki, Japan's fourth-biggest automaker, said it was struggling to keep up with research and development (R&D) in an industry simultaneously exploring non-petrol engines and self-driving vehicles - areas in which it has yet to announce any major strategy.

While Toyota has the financial fire power to keep up with technology, the world's second-largest automaker 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 also announced an upward revision to its full-year profit outlook.

Suzuki, through a majority stake in Maruti Suzuki India Ltd (MRTI.NS: Quote), 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.   Continued...

Toyota Motor Corp President Akio Toyoda (L) and Suzuki Motor Chairman and CEO Osamu Suzuki attend their joint news conference in Tokyo, Japan, October 12, 2016. REUTERS/Toru Hanai/File Photo