Over a year after Toyota Motor Company, the world's largest carmaker and Suzuki Motor Company, the corporate parent of Maruti-Suzuki India limited, which dominates the Indian car market signed the first agreement of a potential partnership, the two Japanese companies on Friday outlined the path forward. At the end of March, it had been announced that the two companies would cross-sell each other's products, Toyota would sell the Baleno and Vitara Brezza while Maruti-Suzuki would likely use its Nexa brand of outlets to sell the Corolla Altis, Friday’s agreement between the two companies takes their relationship deeper.
In Friday’s agreement the two executives at the heart of the family-enterprises, Akio Toyoda of Toyota and Osamu Suzuki of the eponymous firm sound very warm towards each other. The deal which outlines the development of new drivetrain technologies, joint sales in India and crucially going forward with products designed for India in the African market. This deal works for both companies simply because Suzuki, while a massive player in India is just a bit player in the rest of the world and does not necessarily have the money and expertise to develop new drivetrain (engine and transmission) technologies as the world moves towards cleaner and more efficient engines and ultimately zero-emission vehicles.
For Toyota, despite enjoying success with the Innova and Fortuner in the Indian market, the world's largest carmaker failed to make a dent in the compact and compact-sedan segment. One major issue for Toyota has been to develop vehicles at a low-cost and keeping costs down for affordability, something Maruti-Suzuki has cracked with vehicles like the Dzire and Brezza which were developed specifically for the Indian market and have been runaway hits. Toyota feel that such vehicles could be the key in other emerging markets especially Africa. Suzuki's limited resources however meant that the smaller carmaker would have found it tough to make the huge capital expenditure required for new manufacturing resources and establishing a sales network in other countries, this is where the partnership with Toyota will help.
Are these the first steps towards a possible mergerIJ The statement on Friday clearly indicates that Suzuki approached Toyota and the larger carmaker enthusiastically jumped in. However, Suzuki has a history of engaged to and running away at the altar, previous collaborations with General Motors and Volkswagen Group have ended badly. Will this be third-time luckyIJ