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VW will buy 19.9% stake in Suzuki, aims to pass No. 1 Toyota

Von: C. E. White (cewhite3remove@mindspring.com) [Profil]
Datum: 10.12.2009 04:00
Message-ID: <qu6dnbSSrfSz-b3WnZ2dnUVZ_gmdnZ2d@earthlink.com>
Newsgroup: alt.autos.toyota alt.autos
VW will buy 19.9% stake in Suzuki, aims to pass No. 1 Toyota

December 9, 2009 - 2:31 am ET
UPDATED: 12/9/09 7:15 a.m. ET

TOKYO/FRANKFURT (Reuters) -- Volkswagen AG will buy a one-fifth stake in
Suzuki Motor Corp. for $2.5 billion, tapping the Japanese firm's expertise
in small cars and dominance in India as VW seeks to become the No.1

The move is the second coup this week for ambitious VW Chairman Ferdinand
Piech, coming on the heels of the German carmaker's 3.9 billion euro ($5.8
billion) purchase of a 49.9 percent stake in sports car maker Porsche AG.

Piech's top lieutenant, VW CEO Martin Winterkorn, was hopeful the Suzuki
alliance would help catapult the Wolfsburg-based carmaker past industry
leader Toyota Motor Corp. ahead of plan.

"If that succeeds faster (than 2018), we're happy," a grinning Winterkorn
told reporters as he sat next to Suzuki's nearly 80-year-old CEO Osamu
Suzuki at a Tokyo press conference.

CEO Suzuki repeated that he did not intend the company he has led for three
decades to come under VW's control.

"I don't want you to misunderstand: Suzuki is not becoming a 12th brand for
Volkswagen," Suzuki said when asked whether the company might get a German
CEO in the future. "I don't want other folks telling me how to do things."

Suzuki to invest in VW

With the global car industry facing still fragile demand, chronic
overcapacity and stricter environmental regulations, automakers are joining
forces to save billions each would need to develop state-of-the-art

PSA/Peugeot-Citroen of France and Japan's Mitsubishi Motors Corp. said this
month they were exploring deeper ties, which have so far been limited to a
project-based partnership.

The VW-Suzuki deal will see Suzuki invest up to half the proceeds in a
cross-shareholding through the roughly 100 billion yen ($1.13 billion)
purchase of a 2.5 percent voting stake in VW.

"This comes right after the Mitsubishi deal and shows that foreign carmakers
are coming to take stakes in Japanese firms, raising expectations of a
reorganization in the autos sector," said Noritsugu Hirakawa, a strategist
at Okasan Securities.

News of backing from the world's No.3 carmaker sent Suzuki shares up 3.5
percent in a weaker Toyko market. Volkswagen rose as much as 2.9 percent in
Germany and were up 1.5 percent by 11:53 GMT, the leading gainer among
German blue chips.

VW, which is also the No.1 carmaker in China, the world's largest auto
market, would provide Suzuki the technology to make the hybrid and electric
cars it lacks in its line-up.

"In partnership with Suzuki, the VW Group can take a big step forward in the
compact car segment, particularly in the emerging markets in Asia,"
Winterkorn said. "In turn, Suzuki can benefit from our experience with
efficient and environmentally friendly drivetrain and vehicle technologies."

Volkswagen, with its 10 brands including Audi, Skoda, Seat and Porsche, has
said it wanted to become the world's No.1 automaker by 2018 -- a goal it
would reach with relative ease if Suzuki became a subsidiary.

VW, Suzuki sell more than Toyota

In the first six months of 2009, Volkswagen sold 3.265 million vehicles and
Suzuki sold 1.15 million. Their combined sales of 4.415 million units would
be larger than top-ranked Toyota's 3.564 million.

Suzuki lost its equity ties to General Motors Co. a year ago, having bought
back the U.S. automaker's 20 percent stake in it, now worth about 257
billion yen ($2.9 billion).

In contrast to a potential pair-up between PSA and Mitsubishi Motors, which
many regard as a union of the weak, Volkswagen and Suzuki are regarded as
being among the stronger automakers thanks to their big exposure to China
and India.

While major Western markets have suffered one of their worst years on
record, booming sales in China and India are providing a lifeline. GM and
SAIC Motor said last week they will make small cars and commercial vehicles
in India, taking a successful 12-year Chinese partnership into one of the
world's fastest growing auto markets.

Shares in Maruti Suzuki, India's top carmaker and 54 percent-owned by
Suzuki, rose as much as 3.8 percent on Wednesday.

Another Franco-Japanese auto alliance, between Renault SA and Nissan Motor
Co., is stepping up its push to achieve bigger synergies after 10 years of
partnership, considered one of the industry's few success stories.

The bankruptcy of Chrysler this year was twinned with a link-up with Italy's
Fiat S.p.A., while Chinese automakers are looking to buy into brands on sale
from GM and Ford Motor Co. Japan's Mazda Motor Corp. has also come under
some scrutiny given its diminished equity ties with Ford, whose stake has
dropped to 11 percent from one-third.

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