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Toyota, Suzuki shares soar on reports of emerging market tie-up

Wednesday, January 27, 2016 - 15:45
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Toyota Motor Corp, the world's largest automaker, said it would buy out the rest of minivehicle unit Daihatsu Motor Co - an all-stock deal worth about US$3 billion and part of its strategy to strengthen its push into compact cars for emerging markets.

[TOKYO] Toyota and Suzuki soared in Tokyo trading on Wednesday after reports that the Japanese automakers are in talks over a partnership focused on making compact cars for emerging markets, including India.

The leading Nikkei business daily said Toyota - re-established as the world's top auto maker Wednesday - and small-car specialist Suzuki were discussing the possible tie-up. Kyodo News ran a similar story, citing sources familiar with the matter.

Both firms quickly denied they were discussing a partnership, but investors embraced the news, sending Suzuki soaring almost 16 per cent in early deals.

Its shares finished the day at 3,590 yen, up 11.35 per cent.

Toyota rose 3.80 per cent to close at 6,881 yen, after adding more than four percent at one stage.

The Nikkei report said the two firms were also discussing investing in each others' shares while Toyota was set to make its mini-car unit Daihatsu a wholly owned company.

It currently owns slightly more than half of Daihatsu, which surged 16.40 per cent in Tokyo to finish at 1,724 yen.

The reported Toyota-Suzuki talks were aimed at swapping environmentally friendly technologies and other know-how to capitalise on demand for small cars in India, Thailand, Indonesia and other emerging markets.

Both firms issued brief Japanese-language statements that described the reports as "not a fact".

With respect to Daihatsu, Toyota said: "We are constantly considering a number of possibilities relating to Daihatsu, such as partnerships or business restructuring, including making the company a fully owned subsidiary. However, at this point, no decisions have been made." Suzuki, a minicar specialist that sells about 2.8 million vehicles a year globally compared with ore than 10 million for Toyota, drives Japan's minicar market alongside rival Daihatsu.

Suzuki also has a 40 per cent share of the Indian passenger-vehicle sector, while Toyota, which set up its Indian unit in 1997, has been struggling to expand sales there with its market share standing at just five percent, according to the Nikkei.

Suzuki would likely take advantage of Toyota's next-generation technology including self-driving cars, it said.

Suzuki formed a capital alliance with Volkswagen in 2009 after ending a partnership with US giant General Motors.

But differences of opinion over management control and other issues ultimately led to an end to the tie-up with the German auto titan last year.

AFP