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Fri, 20th January 2017

Anirudh Sethi Report

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Archives of “Formula Nippon” Tag

Toyota-Suzuki alliance may help both ride out changes

An alliance between Toyota Motor and Suzuki Motor could be a boon to both sides, helping the former gain ground in emerging markets such as India and giving the latter the engineering needed to compete in an increasingly high-tech industry.

Can’t go it alone

 The two automakers said Wednesday they were discussing collaboration on environmental, safety and information technology. 

Although Toyota President Akio Toyoda told a new conference that the idea of an alliance came together in just two business days after Suzuki Chairman Osamu Suzuki got the ball rolling, there is more to the story. Suzuki’s next partner had been the subject of speculation since August 2015, when the Japanese maker of economy cars ended a capital and business relationship with Germany’s Volkswagen over management conflicts.

Though Chairman Suzuki had said publicly that his company would look to remain independent going forward, another senior executive had acknowledged that collaboration was “necessary” in some fields. Even in India, a successful market for Suzuki, environmental regulations are growing tougher, making investment in technology like hybrid drive systems essential. Rising incomes have also stoked demand for higher-end vehicles in such countries.

Finding a big automaker ally was seen as essential for Suzuki to ensure a presence in self-driving cars. While a Toyota or a Volkswagen has the financial strength to counter the challenge posed by Google and other tech giants in this field — Toyota’s annual research and development budget comes to around 1 trillion yen ($9.59 billion) — Suzuki, which spent just 130 billion yen on R&D in the year ended March 31, hardly stands a chance alone.

Making connections

Japan, Nikkei flash manufacturing PMI (April): 48.0 (expected 49.5)

The preliminary Nikkei manufacturing PMI from Japan for April drops to 48.0

  • expected 49.5
  • prior 49.1
  • Contracted at the fastest in more than three years
  • Output fell the most in two years
  • Markit / Nikkei citing the terrible earthquakes stopping production in the southern manufacturing hub of Kumamoto