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A capital alliance to strengthen the bond and develop new age technology

In a bid to strengthen their collaboration, Toyota Motor Corporation and Suzuki Motor Corporation have decided to blend into a capital alliance and create a ground-breaking automotive technology. Both the Japanese automotive giants look set to acquire stakes in each other. Toyota will buy Suzuki shares worth 96 billion yen while Suzuki will acquire shares in Toyota worth 48 billion yen.

The automotive sector is going through a never-before turning point with new regulations and new entries into the automobile market. The collaboration promises to bring about a brand-newphase in the automobile industry strengthened by Toyota’s electrification technology and Suzuki’s line of compact vehicles.

Toyota’s hybrid systems are designed to meet emission challenges worldwide while also meeting stringent fuel economy regulations.

It’s a unique collaboration serving the dual purpose of promoting sustainable growth in the automotive sector by creating and developing cooperative relations while at the same time, remaining competitors. They also plan to continue their existing specializations besides executing their collaboration in distinctive fields and autonomous driving technology.

The dynamic collaboration has gone a step ahead empowering both the companies with the right to sell each other’s products in India and abroad. Meanwhile, Toyota and Suzuki are currently involved in manufacturing a new model of SUV for the Indian Subcontinent.

The partnership

The alliance came into existence following a detailed and comprehensive discussion between the automotive giants to enter new fields to promote their partnership and create revolutionary developments. There are new technological challenges in the automobile industry with the need for a consolidated system to meet these challenges. To serve this requirement and boost technological developments, the alliance came into existence,driven by innovation and continuous research.

The plan to develop autonomous vehicle technology is the driving force behind the alliance that is also a powerful development to face upcoming challenges head-on. Leveraging one another’s manufacturing competence to meet and exceed the demands of the global markets keeps the momentum going.

Sharing each other’s platforms, models and new-age technologies will aid further developments in India and other international markets like Europe. In fact, Toyota has announced that it will start manufacturing Suzuki cars in the Indian Subcontinent by 2022.

What the collaboration means for Maruti?

Considering the past automobile collaborations in India, this alliance doesn’t look as encouraging as it should be. Volkswagen-Skoda, Nissan-Renault and other partnerships have not seen the desired results in India. There are discussions making headlines that this collaboration can witness the loss in sales of Maruti’s premium range models, leading to a substantial dip in growth.

India is still far away from other brand loyalty markets. Fuel efficiency and value for money top consumers’ list and, its precisely why the partnership looks bleak for Maruti at the moment. Of course, Toyota’s technology can be the future-proof to Suzuki’s long-term prospects. However, the alliance should pass the test of time to see if anything is favourable for Suzuki that doesn’t affect its future prospects. In fact, there’s already a 3 per cent dip in Maruti Suzuki’s shares following the partnership limited to plants only in India.