Auto industry takes a dramatic shift

Toyota Motor Corp. and Suzuki Motor Corp. are on the way to solidify their alliance by taking stakes in one another, pursuing to bolster their position as the auto industry shifts more toward electrified and self-driving cars.

Japan’s largest and leading automaker will acquire around 5 percent of Suzuki shares for about ¥96 billion ($907 million), whilst Suzuki will get a smaller holding valued at about ¥48 billion in Toyota, the automakers stated in statements Wednesday. That is equal to 0.2 percent of Toyota’s shares as of Wednesday’s closing price, before the announcement.

The decision stems out of ties established in 2017 between the two carmakers and is intended to expand their collaboration to keep pace with technological advances sweeping through the transportation industry, from on-demand rides to cars that are not powered by fossil fuels anymore.

For Toyota, the coalition provides access to Suzuki’s expertise in India, which is on track to overtake Japan and become the third-biggest vehicle market in the world.

“Toyota is getting Suzuki at a striking valuation,” said Janet Lewis, an analyst at Macquarie Capital Securities (Japan) Ltd. “It seems to be very similar to the mutual investments made between Toyota and Mazda.”

Toyota will pay ¥4,004 a share, lower than Suzuki’s closing price of ¥4,085 on Wednesday. Suzuki shares are down 27 percent this year, following a 15 percent drop in 2018 as the Indian economy cooled.

The tie-up highlights the obstacles for automakers as they strive and fight to keep up with the breakneck growth in the industry.

As the industry encounters challenges from ride-sharing services to stricter emission targets, smaller Japanese carmakers are increasingly depending on tie-ups with Toyota to help tackle the problems. Toyota also has stakes in Mazda Motor Corp. and Subaru Corp. and works with them on electric cars.

Shreyas Tanna

About Shreyas Tanna

The winner of Mr. Pune 2009 Pageant, Mr. Shreyas Tanna is currently the young, dashing, and dynamic CEO of a market research company called Research N Reports in Pune. Fondly known as RNR, the company specializes in market research as well as industry analysis, and is closely associated with its parent company Absolute Markets Insights (AMI). Mr. Shreyas Tanna began his corporate journey as the Head of Corporate sales & PR at RED Entertainment while pursuing his degree for MMS (Marketing) from the MGM College of Management, Mumbai. After accomplishing the tedious task of balancing his work and education, he further polished his skills in Corporate Sales, Public Relations, Channel Development, Global Client Engagement, Strategic Consulting, and Brand Development by working with HDFC Life and ResearchMoz Global Pvt. Ltd. His dedication towards his work has even won him accolades such as the National Level Performer 2013 – HDFC Life and Mr. ResearchMoz 2015. A disciplined individual with a loving heart, he is often seen taking crisp walks with an engrossed look and a gentle smile within the premises of his company to interact with the various departments. And he will be usually followed by an adorable trail of his beloved trio of Shih Tzu babies proudly known as Gucci, Drake, and Paris. The most enticing thing that you will notice about this content and proud pet parent is his infectious positivity and the firm belief in his eyes, a reflection of his favorite quote, “LIFE IS BEAUTIFUL!”

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