VW buys stake in Maruti's parent

Dec. 9: German auto major Volkswagen AG will buy around 20 per cent stake in Japan’s Suzuki Motor Corporation for $2.5 billion, which will boost its presence in India.
Suzuki Motor Corp. holds a controlling stake of 54 per cent in Maruti Suzuki, the largest carmaker in India with a market share of 50 per cent. This intercontinental alliance will help Volkswagen to realise its dream to become the world’s top automaker, overthrowing current leader Toyota.
The shares of Maruti were up by 2.54 per cent at the Bombay Stock Exchange.
Volkswagen has brands like Audi, Skoda, Seat and Porsche.
An official from Maruti, however, expressed his inability to comment on the impact as the company is yet to hear from the parent company about the deal.
The cross-border deal is expected to have a positive fall-out for Maruti Suzuki, which could become a global hub for supplying small cars through Volks-wagen’s strong network.
“It is too early to speak about concrete projects and plans that Volkswagen and Suzuki might jointly take in India,” a VW Group official said.
He said the two auto giants are likely to focus on synergies in supply chain and vendor development. But the two firms will maintain their independent dealership network.
During a press conference in Japan, Suzuki’s nearly 80-year-old CEO, Mr Osamu Suzuki, said that he did not intend the company to come under Volks-wagen’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.”
Suzuki intends to invest up to half of the amount received from Volkswagen into shares of Volkswagen. Both companies will form a long-term strategic partnership based on this which will support their successful strategies in these challenging times.
The statement said that the management of both the companies have concluded that the complementary strengths of each company make for a perfect fit in exploiting their respective advantages as well as rising to the challenge of the global market. “Volkswagen and Suzuki will offer a compelling solution for customers in emerging markets buying a car for the first time,” it added.