In an announcement on Wednesday, Toyota Motor Corp and Suzuki Motor Corp stated that they will be forming a capital alliance, as they strive to increase technological development whilst also meeting the constant changes that are ongoing in the global auto industry.
The ground-breaking deal will mean that Toyota will pay around 96 billion yen (€820 million) for a 4.94% share in Suzuki, whilst Suzuki will be getting around 48 billion yen (€410 million) worth of shares in Toyota, equal to 0.2% of Toyota’s shares according to Wednesday’s closing price.
This alliance highlights how much of a tough time automakers are having due to the increasing dependence on electric vehicles and the high costs incurred in developing such technology.
Apart from this, automakers have to also develop ride-hailing and autonomous driving technology, which are both very expensive to research and develop even further.
Back in 2016, the two companies brought up the idea of them having a partnership together, with there being increasing technological challenges. Earlier on this year, the two agreed to start developing electric vehicles and compact cars for each other.
In a joint statement released on Wednesday, the two companies vowed to try and overcome new challenges in the industry by “building and deepening cooperative relationships in new fields while continuing to be competitors”.
In their statement, they also said that they would be looking to strengthen and develop technologies and products that each of them already specialise in.
Toyota, the second largest automaker in the world, has been keen on growing in next-generation technology, and has also stated earlier on this year that it will be offering free access to patents for EV motors and power control units. Toyota believes that such a move would help it lower the outlays for expanded electric and hybrid vehicle components in China, the United States and Japan by at least half.
Suzuki’s main area of specialisation over recent years has been in the affordable compact car market, primarily with the Celerio and Swift.
Suzuki has been struggling for recent years, finding it hard to keep up with the growing investment required in research and development in order to develop automated driving functions, as such research and development needs immense costs.
With there being increasing emphasis on electric vehicles, Toyota stated in June that it aims to obtain half of its global sales from such vehicles by 2025, thus being five years ahead of schedule. Toyota will also aim to strike a deal with Chinese battery makers in order to meet the increased demand for electricity-powered cars.