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Thursday, December 10, 2009

VW buys $2.5 bn stake in Suzuki, a foothold in India

Dec 10, 2009

Europe’s Volkswagen will buy 19.9 per cent stake in Indian carmaker Maruti’s Japanese parent Suzuki for about $2.5 billion, a move aimed at enhancing its presence in small car segment in Asia.

Maruti Suzuki accounts for over half the cars on Indian roads, giving Volkswagen the volumes it needs to topple Toyota as the world’s largest carmaker with an estimated sales of seven million units this year. In return, Suzuki would benefit from the European company’s expertise in hybrid cars. “The automobile industry is going through a fundamental shift. Alliances are at the top of the agenda and they are indispensable for competition,” Volkswagen CEO Martin Winterkorn was quoted by Bloomberg as having told reporters in Japan.

While Volkswagen would pay $2.5 billion (over Rs 11,500 crore) for the partnership that will focus on making cars for emerging markets, Suzuki would use half of this amount to buy Volkswagen shares.

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