Author: 
Reuters
Publication Date: 
Thu, 2009-12-10 03:00

TOKYO/FRANKFURT: Germany’s 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 automaker.

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 carmaker Porsche AG.

Piech’s top lieutenant, VW Chief Executive 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.”

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 powertrains.

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 latest deal, confirming an earlier Reuters report, 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.

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