Toyota & Suzuki tie-up: Toyota seeks help of Maruti for improving supply chain

Toyota and Suzuki are partnering at a global level to share their technologies with each other. However, how much of a difference would it make to the Indian Automotive sector? We analyse

By: | Published: February 6, 2017 2:27 PM

In October 2016, two Japanese giants, Toyota and Suzuki announced about sharing of their technologies for better, more fuel efficient and lower emission cars. Today, the companies agreed to start formal talks to establishing a partnership. Sharing would take place on the levels of IT, R&D, autonomous and 'greener' cars. According to Peter Lyon, a contributor for Forbes, the Japanese automotive industry is perplexed by this decision, however, according to Toyota's current president, Akido Toyoda, “ There is a limit to the research and development that a company can do individually.”

The baffled situation in Japan is also due to the fact that Toyota's low-cost car brand, Daihatsu competes directly with Suzuki's cars and here the two are in discussion to share new vehicle technologies. Undoubtedly, this step would witness the introduction of more cost-effective technologies, however, how much of it can reach the consumer is a 'wait and watch' game. The companies also mentioned during the October press conference that this step is needed to survive the 'unprecedented' change as per a report in Wall Street Journal. Toyota also admits that this tie-up would aid in improving their position in the North American and European markets with other competitors. Another reason speculated is the Renault -Nissan alliance with that has used partnerships to lower costs of their vehicles and is a healthy competitor to the Japanese duo.

Suzuki has been known to develop cars that are aggressively priced and Toyota can also learn a few things from the 'Frontier Spirit'. Likewise, development of greener technologies from the second largest global car manufacturer may be witnessed in affordable cars. So, a win-win situation at both ends. This is not the first alliance for Toyota as it already owns a stake in Subaru for hybrid engine technology with Mazda Motor Corporation. BMW AG also works with the Japanese car brand in the development of their electric vehicle technology. Suzuki, however, doesn't have any such partnership and the last time it tried forging one with Volkswagen AG, the experience turned out to be sour for both companies.

Also Read: Toyota loses the ‘World’s Biggest Automaker’ crown to Volkswagen

The Indian automotive sector would surely benefit from this tie-up as Maruti Suzuki is one of the key players and the largest partners of Global Suzuki. However, making more features that revolve around convenience as well as safety while incurring less ownership cost while keeping the occupants comfortable and safe, would involve both companies sharing complete technologies. That said, there is only a certain level till which technologies between rivals can be shared without violating the Antitrust Laws. The new tie-up would, in any case, bring greener, more fuel-efficient cars for a start, later on also evolving in the self-driving/autonomous space.

Toyota too has been trying to expand its presence in India but the company has only two models priced under Rs 10 lakh, owing to which it misses out on the largest car segment in the country. The partnership with Suzuki will allow Toyota to get access to the supplier network of Maruti Suzuki, which will allow Toyota to make more of low-cost cars at a competitive price. There is no official word yet from the Indian arms of both companies but as baffling as it may sound, there's more to win for both companies in this partnership than losing.

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