TOKYO -- In perhaps a heads up about a future partnership in the automobile industry, Toyota Motor Corp. and Suzuki Motor Corp. announced today they are in discussions about working together on environment friendly vehicles, improved safety, and other innovations.
Their reason for this possible collaboration was stated as rapid change in the industry that is promoting consolidation and increasing product development.
Toyota as a result would gain a large presence in countries like India, and can capitalize on Suzuki’s low-cost compact car success. Suzuki can now rely on Toyota's resources, scalability, advanced R&D, and large vehicle experience.
These two companies will partner with the understanding they will still maintain competition between each other. This agreement should also not restrict either from teaming up with other companies.
There were not much details provided by the two CEOs in their announcement, simply stating they have only begun talks, and have not made any solid decisions.
Akio Toyoda, Toyota’s CEO, dodged questions about financial mixing between the companies, indicating there is no merger agreement at the moment. Osamu Suzuki wants his company to maintain its independence.
The primary factor influencing this collaboration is the increasing costs of developing environmentally friendly drivetrains, advanced safety technologies, and technology for autonomously driving vehicles.
“There is a limit to the r&d which each company is conducting individually,” Toyoda said. “We have to be mindful of management resources.”
This may also be interpreted as a way to deal with impending consolidation between other automakers like Nissan and Mitsubishi, which is expected to happened at the end of 2016.
To avoid any Anti-Monopoly regulations, both companies will consult with the Japan Fair Trade Commission as they work on an agreement.
Mr. Toyoda and Mr. Suzuki spoke about this last week, after an initial discussion in Sepetember between Mr. Suzuki and Shoichiro Toyoda, Akio Toyoda’s father.
“We need to have the capability to respond to changes in order to survive,” said Akio Toyoda. “This is exactly the challenge that Toyota has overcome now.”
Mr. Suzuki often speaks about business alliances, especially with smaller manufacturers. Although his agreements with higher-volume producers are often weak, with one relationship ended very badly.
Toyota usually does not like big partnerships, but still continues to grow its power over other Japanese carmakers.
“We at Toyota are now making efforts for the future, such as through our initiatives which help to promote the creation of a hydrogen society, as well as R&D in the artificial intelligence and robotics fields. In these areas, we are collaborating with other companies to work together on R&D,” said Mr. Toyoda in the press conference today.
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