Suzuki Says Joint Projects with VW to Start Next Month

By Brendan Moore

12.16.2009

Suzuki logoSuzuki Chairman Osamu Suzuki told reporters yesterday that work on joint projects with Volkswagen AG, its new partner, will start as early as January 10.

Speaking at the launch of the new Alto minicar in Tokyo, Suzuki said the companies know what they need from each other, and should start working together in earnest after the New Year holidays are over.

The Indian newspaper Economic Times quoted an executive at Maruti Suzuki India as saying that Suzuki and VW would develop a small car with a target price of $4300-$5400 USD.

This statement brought a stern rebuke from Suzuki, who stated, “Suzuki Motor has authority over this, not (Indian subsidiary) Maruti.”

The Indian executive, Maruti Chairman R.C. Bhargava, then backtracked on his remarks, commenting that he is not the one talking with VW, and stating that he merely suggested that the small car might be an option.

“What I have said is, one of the possibilities is that Volkswagen could outsource a small car from us,” he told Reuters.

Well, sure, that’s what he meant to say. So it’s good that all of that has been cleared up.

Suzuki is the acknowledged leader in small cars worldwide, which is why VW has maintained such an ardent pursuit of the company. Suzuki actually makes money on its small cars, but will make even more with some extra economies of scale provided by the tie-up with its new partner, VW.

The VW-Suzuki partnership has produced large ripple effects felt by other manufacturers, in particular Toyota. ‘If the VW-Suzuki partnership works as envisioned, there is no guarantee that Toyota will be a leading player in the small-car market in emerging economies, the importance of which is growing by the day,’ the Japanese economic daily Nikkei said recently.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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5 Comments

  1. I also happen to think this could be a very strong pairing in certain markets. Toyota had better watch out for Suzuki in the lower end of the market, no matter what country you’re talking about.

  2. Good – I hope VW does kick ass on Toyota.

  3. Toyota don’t seem to be playing in the budget tiddler market in quite the same way they used to – iQ, Yaris and Corolla are not really the budget cars they used to be…even in so called developing markets. I suspect that they don’t make enough money when they are punching on against the South Koreans and now the Indians. Toyota have emasculated Diahatsu to the point where it no longer has the expertise necessary to go the distance with Suzuki

    Suzuki on the other hand now has a resurgent VW Group and is no dunce either – the current generation Swift has been a ripper since the day it arrived.

    The VW Group has managed a real coup here.

  4. Sandberg,
    Well said. I couldn’t agree more. It’s great to see VW back on top.

  5. This makes VW the one to beat now, not Toyota. Small cars will be the ones that developing countries want. VW is being smart by getting Suzuki.

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