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http://www.wsj.com/articles/toyota-motor-suzuki-in-talks-on-business-partnership-1476255924
Car makers said they would explore cooperation on new vehicle technologies
TOKYO— Toyota Motor Corp. said Wednesday it was in talks with Suzuki Motor Corp. to share the burden of developing self-driving cars and low-cost vehicles, a step the companies said was needed to survive “unprecedented” change.
From tighter regulations that threaten the dominance of the gasoline engines to challenges from Silicon Valley upstarts, car companies around the world are finding it easier to share the cost of developing new technologies than to go it alone.
“There is a limit to the research and development that a company can do individually,” said Akio Toyoda, president of Toyota.
But while Toyota has one eye on the future of cars, it also must figure out how to sell more cars today, particularly in emerging markets like India. Mr. Toyoda said he hoped to learn Suzuki’s “frontier spirit.” Toyota is trying to overcome slowing sales growth in its biggest markets and a stronger yen eating into profits.
Suzuki holds a more than 40% share in India, one of the few remaining growth markets for cars. But selling low-margin small vehicles doesn’t leave much money left over for bold technology bets.
“There would be uncertainty in the future if we only continued to refine our current automobile technology,” said Osamu Suzuki, Suzuki’s chairman.
The two executives said it was too early to say whether their partnership would involve an exchange of shares.
Mr. Toyoda said the companies were treading cautiously, mindful of antitrust laws in Japan. Toyota subsidiary Daihatsu Motor Co. and Suzuki hold the majority of the minicar business in Japan. The companies said they would continue to be competitors while sharing research costs.
“We are independent companies, and we are going to run these companies independently,” Mr. Suzuki said.
If Mr. Toyoda seals a Suzuki deal, it would be the latest example of Toyota bringing smaller domestic rivals into its orbit. It already owns a stake in the maker of Subaru cars and shares its gas-electric hybrid engine technology with Mazda Motor Corp. in exchange for access to Mazda’s gasoline engines.
Among non-Japanese manufacturers, BMW AG works with Toyota in developing electric vehicles.
Toyota has been an early leader in alternative fuel technologies for cars. The company is also investing heavily in computer systems that allow cars to pilot themselves in some instances and to communicate with each other, to improve vehicle safety.
Mr. Toyoda said he hoped a tie-up with Suzuki would make his company better at working with others, which he has singled out as a problem since he became president. Toyota and Suzuki share a similar corporate culture, having both started life as makers of automatic looms and tracing their origins to the same region of Japan, he said.
Toyota is facing an increasing challenge from the Renault-Nissan Alliance, which has used partnerships with other auto makers to cut costs. Nissan Motor Corp. is in talks to acquire a controlling stake in Mitsubishi Motors Corp. , a deal that would catapult the alliance into the upper echelons of the world’s largest car makers.
Suzuki sells more than two million cars a year, while Toyota sells more than 10 million.
This isn't the first time Suzuki has tied up with a larger, deep-pocketed rival, seeking to barter its know-how in inexpensive cars for advanced technology.
In 2009, it struck a partnership with Volkswagen AG under which the German car maker purchased a 19.9% stake in Suzuki, but they quickly clashed and finally dissolved their shareholdings in each other last year.
Suzuki refused to share its recipe for small-car success with Volkswagen, and Volkswagen’s technology was too expensive to put in Suzuki’s cars, said Christopher Richter, a Tokyo-based auto analyst at brokerage firm CLSA.
A tie-up between Toyota and Suzuki would bring together two families that have been in the auto business for generations. Mr. Suzuki, 86 years old, said he first contacted Toyota’s former president, 91-year-old Shoichiro Toyoda, about a partnership last month and the discussions expanded to include Mr. Toyoda’s son, Akio Toyoda, the current president.
Earlier this year, Mr. Suzuki handed over the chief executive’s title to his son, Toshihiro Suzuki, to atone for a scandal involving fuel-economy mismeasurement.
