Volkswagen sees every reason to be Number 1 in world car making. Hence the bid to sweep $2.5 billion from Suzuki is no humbug. VW’s vision is to dominate the Indian market first and for this a JV has become a must for every auto maker. The market is wide, technology is rich and offers are aplenty. Then why should VW not mend its wall?
This is not the first such case- PSA Peugeot Citroen (France) and Mitsubishi Motors are drawing the pinnacles for coming together. This created the trend for overseas companies to target the Japanese auto giants for reorganizing the segments. Under the proposed deal, Suzuki will shell out half the volume into VW shares to have a back up for the world no 3 maker thereby receiving shares of 3.5 in the least Japanese market.
The strong hold of Suzuki and the equally share of VW in Germany are making the honeymoon. VW runs its show in China as the number one and the world’s largest auto market like China will offer Suzuki, the technical know-how for electric and hybrid vehicles. The association between VW and Suzuki will see an emerging trend in compact cars in the Asia region.
VW has a large platform with its Audi, Skoda, Seat and Porsche and this induces the company to eye on the number one spot by 2018, provided Suzuki backs up every move. Till June 2009, VW sold 3265 million cars while Suzuki could muster 1.15 million; the combined figure, 4415 million units would supercede Toyota’s 3564 million, it is estimated. Suzuki’s earlier stint with GM @257 billion for 20% stake lost the due importance.
The nexus between PSA and Mitsubishi is seen as a failure but this one between VW and Suzuki will yield much prospects, it is expected given the current situation in India and China. The overseas companies look upon India and China as the compensatory regions for the downfall. The JV between GM and SAIC is a long one, for 12 years, and it is the longest and successful partnership in the world of automobiles.
Meanwhile Suzuki received some good news that the shares of Maruti Suzuki India rose to 3.8%.The alliance between Renault SA and Nissan is oxygenated after 10 years to yield some good results. The sale of Chrysler (out of bankruptcy) with the tie-up of Italy’s Fiat SPA has come to a frozen state, since the Chinese companies prefer brands from GM and Ford.
The recent JV between VW and Suzuki will certain to benefit the latter by providing cash-on and pure technology. A threat has started between Ford and the Japan’s Mazda, as the stake has dropped by 11%. However, Mazda could resist with a refined $1 billion share fund for developing hybrid technology. The futuristic fuel-efficiency and emission norms set for 2011 would add much to the Mazda’s stake.