Toyota, Suzuki poised to unveil partnership on Monday

2/2 © Reuters. Toyota Motor Corp's logo is pictured on a car in Tokyo© Reuters. Toyota Motor Corp’s logo is pictured on a car in Tokyo 2/2

By Naomi Tajitsu

TOKYO (Reuters) – Japan’s Toyota Motor Corp (T:) and Suzuki Motor Corp (T:) appeared poised to unveil a wide-ranging partnership on Monday that could include the development of new technologies and procurement.

Both automakers, which said in October they were exploring a tie-up, said their boards would make a decision on the matter later in the day. The firms are also set to announce third-quarter earnings on Monday.

A partnership could offer Suzuki, a maker of affordable minivehicles and compact cars, access to Toyota’s R&D expertise. Japan’s fourth-largest automaker has said it has been struggling to keep pace with the breakneck speed of R&D in the industry.

While the two companies have yet to say how Toyota may gain from a partnership with Suzuki, insiders at the world’ No. 2 automaker have said it will likely seek Suzuki’s help in cracking the India market.

Suzuki dominates the Indian market through its majority stake in Maruti Suzuki India Ltd (NS:), which sells roughly half of all cars sold in the country, whereas Toyota is still struggling to gain significant market share despite years of trying.

Access to Suzuki’s tightly knit supply chain network in India, which the automaker has cultivated since the 1980s, could help Toyota to develop and sell more mainstream cars tailored for the local market.

Fujio Ando, an adviser at Chibagin Securities, noted that except for compact cars, the two automakers had little overlap in their production line-up, adding that Suzuki was already buying hybrid technology from Toyota.

“One question will be how much Toyota will open up to Suzuki given its relations with Daihatsu,” he added, referring to Toyota’s own minivehicle specialist firm.

Toyota invests heavily in R&D in areas including automated driving, artificial intelligence and lower-emission cars.

Suzuki has long sought a bigger partner. A partnership with Germany’s Volkswagen (DE:) ended on a sour note in 2015, after the German carmaker accused it of violating their pact by agreeing a diesel engine deal with Italy’s Fiat.

Shares in Toyota and Suzuki were roughly flat, in line with the broader Tokyo market.

(This version of the story corrects company name to Chibagin Securities in paragraph 7)

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