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Toyota, Suzuki shares soar on reports of partnership

2016-01-27 08:27

Tokyo - Toyota and Suzuki soared in Tokyo trading after reports that the Japanese automakers are in talks over a partnership focused on making compact cars for emerging markets, including India.

The leading Nikkei business daily said Toyota, the world's biggest automaker, and small-car specialist Suzuki were discussing the possible tie-up. Kyodo News  ran a similar story, citing sources familiar with the matter.

Both firms quickly denied they were discussing a partnership, but investors embraced the news, sending Suzuki soaring almost 16 percent in early deals.

Rise in share price

The shares finished the morning at 3565 yen, up 10.57%.

Toyota rose 3.68% to 6873 yen by the break, after adding more than 4% at one stage.

The Nikkei report said the two firms were also discussing investing in each others' shares while Toyota was set to make its mini-car unit Daihatsu a wholly owned company. It currently owns slightly more than half of Daihatsu.

The reported Toyota-Suzuki talks were aimed at swapping environmentally friendly technologies and other know-how to capitalise on demand for small cars in India, Thailand, Indonesia and other emerging markets.

Both firms issued brief Japanese-language statements that described the reports as "not a fact".

With respect to Daihatsu, Toyota said: "We are constantly considering a number of possibilities relating to Daihatsu, such as partnerships or business restructuring, including making the company a fully owned subsidiary. However, at this point, no decisions have been made."

Suzuki, a minicar specialist that sells about 2.8 million vehicles a year globally compared with about 10 million for Toyota, drives Japan's minicar market alongside rival Daihatsu.

Suzuki also has a 40% share of the Indian passenger-vehicle sector, while Toyota, which set up its Indian unit in 1997, has been struggling to expand sales there with its market share standing at just 5%, according to the Nikkei.

Suzuki would likely take advantage of Toyota's next-generation technology including self-driving cars, it said.

Suzuki formed a capital alliance with Volkswagen in 2009 after ending a partnership with US giant General Motors.

But differences of opinion over management control and other issues ultimately led to an end to the tie-up with the German auto titan in 2015.


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