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Volkswagen Buys 19.9% of Suzuki

Move targets Toyota in Asia. Fight for number one intensifies.

by on Dec.09, 2009

Maruti Suzuki dominates the Indian market.

Maruti Suzuki dominates the Indian market.

Volkswagen AG will buy 19.9% of Suzuki Motor Corporation for $2.5 billion, which in turn will reinvest half of the proceeds in VW stock it was announced in Frankfurt and Tokyo today. If the transaction is approved by regulators, VW would become the largest shareholder of Suzuki.

The latest crossholding, obtained at a more than 10% discount to the price of publicly traded Suzuki shares, is clearly designed to bolster VW’s  efforts in Southeast Asia auto markets, long dominated by Toyota Motor Corporation.

VW is the leader in China, where Toyota has a growing presence, but is locked out of Japan and has a weak presence in India where Suzuki is the dominant player through its control of Maruti, which has 50% of the market.

Asia is the only growth market for automobiles in the world, as European and American economies continue to languish.

Toyota is locked in to struggle with VW for the title of the world’s largest automaker.

The difference between the two companies is that VW is profitable and using the cash generated to make strategic alliances, while Toyota is retrenching and attempting to return to profitability after posting record losses.

Suzuki, for its part, said that it is not big enough to develop new low cost models, as well as the low CO2 emissions models that will require expensive hybrid and electric technologies.

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GM Jettisons Another Japanese Partner

First, Toyota and NUMMI. Now, Suzuki and CAMI.

by on Dec.04, 2009

The first 2005 Chevy Equinox rolls off the line at the CAMI Assembly Plant in Ingersoll, Ontario on February 20, 2004.

First Chevy Equinox off the line at the CAMI plant in Ingersoll, Ontario, February 2004.

General Motors of Canada today announced that it would acquire 100% ownership of CAMI Automotive Incorporated through a transaction to buy shares currently owned by long-time 50% partner Suzuki Motor Corporation.

GM previously ended a link with Suzuki in Asia during November 2008.

No financial details of the latest transaction were released, and it should have no effect on potential customers.

Last June, GM abandoned its pioneering joint venture, NUMMI, with Toyota Motor Corporation in Fremont, California. Toyota has since decided to close the plant located in its largest U.S. market.

GM’s latest move is in keeping with employment agreements with the federal and provincial Canadian governments that were part of the taxpayer financing agreements necessary to bring GM out of bankruptcy in July.

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