Reading like a reenactment of German and Japanese diplomacy during WWII, Volkswagen continues to consolidate its status as the world’s most dominant automaker with discussions of acquiring a stake in Suzuki while the Japanese automaker relaxes ties with former affiliate GM.
In a move that has investors foaming at the mouth, according to both the Wall Street Journal and German media sources, Volkswagen is interested in a 10 percent stake in Suzuki, which GM, which first invested in Suzuki in 1981, sold its remaining 3 percent equity stake in November to raise badly need money. GM and Suzuki continue to cooperate on development of hybrid and fuel-cell vehicles.
Suzuki is the fourth largest Japanese automaker, but makes up nearly half of all cars sold in India, a market where 75% of the cars sold are small hatchbacks and seemed poised to explode before the worldwide economic downturn. Nevertheless, Suzuki is among the few automakers to forecast a profit for the current fiscal year.
The possible partnership between the German and Japanese companies follows intense negotiations between VW and Porsche about a possible merger with the sports-car maker. One of the factors driving investor interest in Suzuki’s shares is the possibility that any potential tie with Volkswagen, Europe’s biggest automaker by sales, could help the Japanese firms bid to further develop fuel-efficient technologies, an area VW is particularly adept in.