Volkswagen and Suzuki Motor are going into a partnership which will see the German automaker take a 20% stake in Japan's small car specialist.

It has been revealed that Volkswagen and Suzuki Motor Corp. are in talks about a long-term co-operation agreement. Rumours of such a tie-up have been going around for some months. According to an official statement, VW will purchase 19.9 percent of Suzuki's issued shares. In turn Suzuki will use up to half of the amount received from VW to buy a stake in the Wolfsburg company.

Although the two automakers compete in some segments, they reckon they also compliment each other. VW has expertise in diesel technology and hybrid systems while Suzuki is quite strong in the fast-emerging India market. In addition to cars and motorcycles, Suzuki builds marine transportation solutions and all-terrain vehicles (ATVs).

If the authorities approve the transaction, the world's largest car manufacturing alliance would be created. It would surpass Toyota in terms of sales.

Consolidation seems to be the key industry word again. Recently French company PSA Peugeot Citroën announced it was entering into a cooperative agreement with Japan's Mitsubishi Motors. Italy's Fiat already calls the shots at Chrysler LLC while Nissan and Renault have been mates for about a decade now.


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