Two Japanese automakers – Toyota and Suzuki – are set to announce an agreement later on Monday wherein Suzuki would have access to Toyota's R&D expertise, while Toyota is expected to seek Suzuki's help in cracking the tough India car market.
Maruti Suzuki India Ltd, in which Suzuki owns a majority stake, leads the Indian car market, which is flooded with all the global auto names like Volkswagen, General Motors, Honda Motor, Ford and others, apart from Toyota and Suzuki.
For the month of January, Maruti Suzuki accounted for one in every two passenger cars sold in India, or approximately 50.4 percent of all cars, utility vehicles and vans sold in India the past month. The carmaker's market share was 45.9 percent a year earlier, while its all-time high market shares was 52 percent, recorded in November 2016.
Meanwhile, the wide-ranging partnership between Toyota and Suzuki could include the development of new technologies and procurement, Reuters reported. Toyota has invested heavily in its R&D, which includes automated driving, artificial intelligence and lower-emission cars. In October last year, the two automakers said they were exploring a tie-up.
Suzuki, which makes affordable minivehicles and compact cars, is said to be struggling to keep pace with the breakneck speed of R&D in the industry. In 2015, Suzuki's partnership with Volkswagen ended over allegations that Suzuki violated the agreement by agreeing to a diesel engine deal with Italy's Fiat. Suzuki is already buying hybrid technology from Toyota.
At the same time, despite years of trying, Toyota is struggling to gain a significant market share in India. The world's largest carmaker may benefit from access to Suzuki's tightly knit supply chain network in India in developing and selling more mainstream cars tailored for the local market.
Fujio Ando, an adviser at Chibagin Securities, told Reuters that except for compact cars, Toyota and Suzuki had little overlap in their production line-up.
"One question will be how much Toyota will open up to Suzuki given its relations with Daihatsu," Ando said, referring to Toyota's own minivehicle specialist firm.
On Monday, shares of Maruti Suzuki traded at Rs 6,161, up 0.75 percent from their previous close on the BSE.