Volkswagen to buy 20 pc of Japan's Suzuki

The German car maker Volkswagen will buy nearly 20 percent of Japan's Suzuki for more than 2.5 billion dollars, giving Volkswagen a solid footprint in the Indian automarket. Europe's biggest car maker, already has a strong presence in China but wants to expand its Asian reach in an alliance with the Japanese compact car manufacturer. Suzuki said the 19.9-percent stake is worth about 222.5 billion yen and that it is planning to invest up to one half of the amount received from Volkswagen into shares of Volkswagen. PSA Peugeot Citroen of France had a word with Mitsubishi, and the partners Renault and Nissan have said they would launch 'an ultra low-cost car' in India in 2012 to take on Tata Nano.

The two companies intends to have a joint approach to the growing worldwide demand for more environment friendly vehicles. VW chairman Martin Winterkorn told a Tokyo news conference that Suzuki is a world leader in the compact and sub-compact car segment, and it is one of the world's leading motorcycle manufacturers. Suzuki also has the advantage in manufacturing low-cost compact cars. When the deal was announced Tokyo markets were closed. GM pulled out of Suzuki last year as the US auto giant faced bankruptcy, ending in 1981. For VW, the agreement is another step in its plan to overtake Toyota as the world's biggest automaker by 2018. Winterkorn said, Eight to 10 years from now, we want to become number one in the world, and I believe that we'll be able to accelerate that into happening with cooperation with Suzuki.

VW has just bought 49.9 percent of the German luxury sports car maker Porsche and it will also take it over by 2011, making Porsche its 10th brand. The head of VW's supervisory board, Ferdinand Piech, has said he sees Volkswagen eventually owning 12 brands and is also interested in the German heavy-vehicle maker MAN which could complement its Swedish truck unit Scania. Chevrolet Beat and Volkswagen Polo are the upcoming cars in India.

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