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Toyota, Suzuki partner on hybrids, EVs, building cars for each other

NAGOYA, Japan — Toyota and Suzuki on Wednesday said they planned to produce electric vehicles and compact cars for each other to better compete with fast-changing technologies in the global auto industry. The agreement follows an initial R&D tie-up announced by Japan's No. 1 and No. 4 automakers in 2017, and will see more vehicles produced by Suzuki for Toyota, one of the world's biggest carmakers. Although Suzuki is far smaller, it is a dominant force in the fast-growing Indian market. The two automakers have been pooling their strengths. Toyota is a leader in hybrid technology and is investing heavily in automated driving, while Suzuki specializes in affordable compact cars — as many automakers struggle to keep pace with ballooning investment in EVs and self-driving cars. Under the latest agreement, Suzuki will source gasoline hybrid systems for cars it sells worldwide from Toyota, which pioneered hybrid vehicles with the Prius more than 20 years ago, the companies said in a joint statement. In return, Suzuki will produce two compact models for Toyota in India based on its Ciaz and Ertiga models. Further cooperation with Suzuki will help Toyota expand its presence in India, the world's fifth-largest passenger car market where it has struggled to grow sales due to lean demand for its lower-cost models. The deepening partnership between the two automakers will enable cost-conscious Suzuki to tap into Toyota's R&D firepower to develop lower-emission vehicles and self-driving cars — areas which Suzuki has admitted it is struggling to keep up. "We believe that the expansion of our business partnership with Suzuki ... will help give us the competitive edge we will need to survive this once-in-a-century period of profound transformation," Toyota President Akio Toyoda said in a statement. The two automakers will deepen their cooperation in India, where Suzuki's hybrid vehicles will be made using engines and batteries locally produced by Toyota. They will also join forces in Europe, where Toyota will produce electric vehicles based on its RAV4 SUV crossover and Corolla wagon for Suzuki, while Suzuki will supply Toyota with gasoline engines for compact vehicle models sold in the region. Suzuki will also produce its Baleno, Vitara Brezza, Ciaz, and Ertiga models for Toyota which will be rebranded and renamed as Toyota models for the African market.

Toyota struggling in Latin American market, attempting recovery

With uncertainty in the US and Chinese markets, automakers are scrambling to rev up their efforts in what were traditionally secondary markets. Take Toyota's efforts in Latin America. A recent story from The Wall Street Journal highlights the Japanese brand's push in the southern hemisphere, particularly in Brazil, where it has expanded its operations and installed new executives with a greater range of powers, all in a bid to grab a bigger slice of the ever-growing South American pie.
South America is dominated by General Motors, Fiat and Volkswagen, which maintain a combined 60 percent of the market share - Toyota holds a mere 4.5 percent. The WSJ spoke with Steve St. Angelo, Toyota's boss in Latin America, who said, "We are playing catch up, but we're catching up fast. We now have the resources to give the region the attention it really needs and deserves."
That attention includes an all-new, locally produced small car called the Etios. As bewildering as it seems, Toyota wasn't competing in the low-cost economy car market in South America. With the Etios, which arrived in September of 2012, its sales in the first seven months of 2013 are up 75 percent.

Japan could consolidate to three automakers by 2020

Sergio Marchionne might see his dream of big mergers in the auto industry become a reality, and an analyst thinks Japan is a likely place for consolidation to happen. Takaki Nakanishi from Jefferies Group LLC tells Bloomberg the country's car market could combine to just three or fewer major players by 2020, from seven today. "To have one or two carmakers in a country is not only natural, but also helpful to their competitiveness," Nakanishi told Bloomberg. "Japan has just too many and the resources have been too spread out. It's a natural trend to consolidate and reduce some of the wasted resources." Nakanishi's argument echoes Marchionne's reasons to push for a merger between FCA and General Motors. Automakers spend billions on research and development, but their competitors also invest money to create the same solutions. Consolidating could conceivably put that R&D money into new avenues. "In today's global marketplace, it is increasingly difficult for automakers to compete in lower volume segments like sports cars, hydrogen fuel cells, or electrified vehicles on their own," Ed Kim, vice president of Industry Analysis at AutoPacific, told Autoblog. Even without mergers, these are the areas where Japanese automakers already have partners for development. Kim cited examples like Toyota and Subaru's work on the BRZ and FR-S and its collaboration with BMW on a forthcoming sports car. Honda and GM have also reportedly deepened their cooperation on green car tech. After Toyota's recent buyout of previous partner Daihatsu, Nakanishi agrees with rumors that the automotive giant could next pursue Suzuki. He sees them like a courting couple. "For Suzuki, it's like they're just starting to exchange diaries and have yet to hold hands. When Toyota's starts to hold 5 percent of Suzuki's shares, this will be like finally touching fingertips," Nakanishi told Bloomberg. "I absolutely do believe that we are not finished seeing consolidation in Japan," Kim told Autoblog. Rising development costs to meet tougher emissions regulations make it hard for minor players in the market to remain competitive. "The smaller automakers like Suzuki, Mazda, and Mitsubishi are challenged to make it on their own in the global marketplace. Consolidation for them may be inevitable." Related Video: