Toyota Motor Corp and Suzuki Motor Corp will form a capital alliance, the Japanese carmakers said on Wednesday, as they look to accelerate technological development and meet sweeping changes upending the global auto industry.
The deal will see Toyota pay around 96 billion yen ($910 million) for a 4.94% stake in smaller Suzuki, while Suzuki will acquire around 48 billion yen worth of shares in Toyota. That is equivalent to 0.2% of Toyota’s shares as of Wednesday’s closing price, before the announcement.
The tie-up highlights the challenges for automakers as they fight to keep up with the breakneck growth in an industry that has been transformed by the rise of electric vehicles (EV), ride-hailing and autonomous driving.The two companies said in 2016 they were exploring a partnership, citing technological challenges and the need to keep up with industry consolidation. The pair earlier this year announced a tie-up to produce electric vehicles and compact cars for each other.
The two said in a joint statement they intended to overcome new challenges facing the industry by “building and deepening cooperative relationships in new fields while continuing to be competitors”.They said they would strengthen technologies and products in which each of them specialise.
Toyota has been looking to expand scale in next-generation technology and said this year it would offer free access to patents for EV motors and power control units. It believes that move would help it cut by as much as half the outlays for expanded electric and hybrid vehicle components in the United States, China and Japan.
Supplying rivals would greatly expand the scale of production for hardware.
Suzuki, which specialises in affordable compact cars, had been struggling to keep pace with the huge costs of investing in research and development for automated driving functions.Toyota said in June it aims to get half of its global sales from electrified vehicles by 2025, five years ahead of schedule, and will tap Chinese battery makers to meet the accelerated shift to electricity-powered cars.
