Toyota, Suzuki to form capital tie-up: sources

Tokyo

JAPAN'S Toyota Motor Corp and Suzuki Motor Corp plan to form a capital tie-up, two sources said on Wednesday, as they look to accelerate technological development and meet sweeping changes upending the global car industry.

The deal will see Toyota take around a 5 per cent stake in smaller Suzuki, one of the sources said. Both of the sources declined to be identified.

Toyota will pay around 96 billion yen (S$1.26 billion) for the stake in Suzuki, both NHK and the Nikkei newspaper reported earlier, adding that Suzuki would invest about 48 billion yen in Toyota.

Suzuki declined to comment. A Toyota spokesman said the reports were not based on the company's announcement.

The move highlights the challenges for carmakers as they fight to keep up with the breakneck growth in an industry that has been transformed by the rise of electric vehicles (EV), ride-hailing and autonomous driving.

The carmakers in 2016 said they were exploring a partnership, citing technological challenges and the need to keep up with industry consolidation. The pair earlier this year announced a tie-up to produce electric vehicles and compact cars for each other.

Toyota has been looking to expand scale in next-generation technology and said this year it would offer free access to patents for EV motors and power control units. It believes that move would help it cut by as much as half the outlays for expanded electric and hybrid vehicle components in the United States, China and Japan.

Supplying rivals would greatly expand the scale of production for hardware.

Suzuki, which specialises in affordable compact cars, had been struggling to keep pace with the huge costs of investing in research and development for automated driving functions.

Toyota said in June that it aims to get half of its global sales from electrified vehicles by 2025, five years ahead of schedule, and will tap Chinese battery makers to meet the accelerated shift to electricity-powered cars. REUTERS