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As you can see from the image above depicting Osamu Suzuki, chairman and CEO of Suzuki Motor Corp. and Martin Winterkorn, his counterpart at Volkswagen AG, the two auto companies have agreed to link arms. Volkswagen has properly announced that it has "reached a common understanding to establish a close longterm strategic partnership" with Suzuki Motor Corporation. The union means VW will buy 19.9% of Suzuki, then Suzuki will spend half the money they just received from Volkswagen reciprocating by buying VW shares.

Beyond that, Suzuki gains access to VW technology and the comforting warmth of a hugely profitable big brother. Volkswagen gets a nearly turn-key solution to boosting its small car development and piggybacks on Suzuki's presence in India and Southeast Asia. Suzuki, and of course, VW, will remain independent, but unofficial word suggests that VW might increase its stake to 33% or more at some point down the road, which could shift the balance of power.

VW's press release is after the jump, and there will be a press conference and webcast (you'll need a user name and password to watch) at 5 p.m. with more details.

[Source: Volkswagen | Image: Kazuhiro Nogi/AFP/Getty]


Volkswagen and Suzuki agreed to establish a comprehensive partnership
Important step towards the future for both companies

Tokyo/Wolfsburg, December 9, 2009
- Volkswagen Aktiengesellschaft and Suzuki Motor Corporation have reached a common understanding to establish a close longterm strategic partnership. A framework agreement has been signed by
representatives of both companies today.

In terms of global presence and product diversity, the partnership marks an important step towards the future for both Volkswagen and Suzuki. In terms of product portfolio, global distribution and manufacturing capacities, Volkswagen and Suzuki ideally complement each other. The companies plan a joint approach to the growing worldwide demand for more
environmentally friendly vehicles. The management of Volkswagen and Suzuki have concluded that the complementary strengths of each company make for a perfect fit in exploiting their respective advantages as well as rising to the challenge of the global market. In the automotive industry, where globalization and diversification proceed in parallel, both companies will establish a cooperative relationship while respecting each other's independence as a stand-alone entity. Both parties are focused on achieving synergies in the areas of rapidly growing emerging markets as well as in the development and manufacturing of innovative and environmentally friendly compact cars.

To support a smooth development of this relationship, Volkswagen will purchase 19.9% of Suzuki's issued shares. The Closing of the transaction is subject to approval of the relevant authorities and is expected in January 2010. Suzuki intends to invest up to one half of the amount received from Volkswagen into shares of Volkswagen. Both companies will form a
long-term strategic partnership based on this which will support their successful strategies in these challenging times.
As demand continues to rise for smaller cars and for powertrains with higher fuel efficiency and lower CO2 output, Volkswagen and Suzuki will offer a compelling solution for customers in emerging markets buying a car for the first time and also for customers in advanced economies seeking to lower their CO2 footprint while still enjoying the freedom of transport offered by an exciting range of cars.

A press conference will be held on 5 pm in Tokyo together with a webcast which will be available on http://www.primestage.net/hosting/VW-Tokyo/

Company information
Suzuki is the world leader in the mini-car segment: with a workforce of approximately 51,000, the company sold 2.3 million vehicles and 3.1 million motorcycles in the 2008/2009 financial year (to March 31), generating sales revenue of €20.9 billion and an operating profit of €534 million. Suzuki operates 35 production facilities in Japan and other countries such as
Indonesia, India, China, Thailand and Spain.

In fiscal year 2008 Volkswagen, which has a workforce of 370,000, sold 6.3 million vehicles, generating sales revenue of €113.8 billion and achieved an operating profit of €6.3 billion. Volkswagen operates 61 production plants worldwide.

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    • 1 Second Ago
      • 5 Years Ago
      Hayabusa-powered Up!
      • 5 Years Ago
      Esteem to be renamed Lebensraum.
      • 5 Years Ago
      This may have more to do with Suzuki than VW. Suzuki, like Subaru, needs a supply chain partner to keep costs down because they are so low volume. GM dumped its shares of Suzuki and Subaru during its cash crunch. Subaru shacked up with Toyota, and now Suzuki with VW. I do wonder what Suzuki will be offering VW.
        • 5 Years Ago
        -"Volkswagen gets a nearly turn-key solution to boosting its small car development and piggybacks on Suzuki's presence in India and Southeast Asia" -
      • 5 Years Ago
      Volkswagen (VW) picks up 20% stake in Suzuki. May source small cars from Maruti Suzuki
      * Suzuki has technology for small, compact hatchbacks
      * VW will share its green technology
      * Suzuki has diesel engines of up to 1.3 litres
      * VW has tech for diesel engines above 1.3 litres

      readmore Suzuki and Volkswagen Deal in detail expectation
      • 5 Years Ago
      What does this mean for us 2 wheeled enthusiasts? Will there be a new line of VW motorcycles on the way?
      • 5 Years Ago
      that's a funny pic
        • 5 Years Ago
        nothing worse than the awkward handshake.
      • 5 Years Ago
      This doesnt make any sense. VW is making a mistake.

      • 5 Years Ago
      Sounds like a kind of deal that was done with Ford and Mazda, worked out well for them and I wish these two companies the best.
      • 5 Years Ago
      You remember what happened the last time the Germans and Japanese got together?
        • 5 Years Ago
        I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part.
      • 5 Years Ago
      Ooh maybe Suzuki could use this to get a real flagship!

      Like a Suzuki designed Audi R8 (Lamborghini Gallardo) with an engine that has heads that were redone by the motorcycle Hyabusa group or heck let them design their own v8 or 12!
      • 5 Years Ago
      VW is intent on competing against themselves. I can see the Suzuki tie up as they do have a great motorcycle operation and a very good micro car operation. But, in europe VW, Seat and Skoda are all competing for the same customers. Reminds me of Pontiac, Chevy, Saturn.
        • 5 Years Ago
        Not to mention VWs repeated attempts to take VW upmarket into Audi territory
        • 5 Years Ago
        At one time GM also knew how to run a company with three distinctive brands in one key market. But history shows, it was ultimately unsustainable. VW is going down the exact same path. #1 in the world with too many competing brands. Sounds unfortunately familiar. And VW too will eventually fail because of it. Maybe not today, maybe not 20 years from now. But sometime this century it will happen to VW unless they sell of or close some of their brands.
        • 5 Years Ago
        Man, if I could get a SEAT here, I would.

        SEAT Leon Cupra R
        Audi S3 engine wrapped in a Leon body at a budget price? Yes please.
        • 5 Years Ago
        Europe is not the biggest car market in the world. It's China since this year, then the US. And with its future population growth outlook, I think European market will actually shrink at one point.
        • 5 Years Ago
        @Throwback - yes. this feels troublingly like GM a decade or so ago... Wait.. GM did own 20% of Suzuki in '01. Yeah this can't end well, even for VW. VW has no issues managing big prestige brands with heritage but their budget brands? Skoda? Seat? Neither are exactly on fire. This can't help. I don’t like it.
        • 5 Years Ago
        Also, VW isn't #1.

      • 5 Years Ago
      Judo CHOP!! Hiyeee-yaa!
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