Act 1, Scene 1 of Toyota-Suzuki partnership unfolds

It is now barely a week since Toyota and Suzuki made known their plans to collaborate in India’s car electrification programme. The two Japanese automakers had kicked off talks many months ago and it is quite apparent that the India initiative is the first part of perhaps more news to follow.

To observers, it was quite clear that the country would be on the radar of this alliance. Toyota has made little headway in this predominantly small car market despite its formidable global standing. On the other hand, Suzuki is relatively a marginal player worldwide but the monarch of all when it comes to India.

Lately, there has been a noticeable trend of Japanese entities coming together in a new global automotive arena where China is clearly calling the shots. It was only last year when Nissan took a controlling stake in Mitsubishi while erstwhile rivals, Honda and Yamaha, have decided to team up in a niche area of small scooters.

More recently, Toyota and Mazda have come together for an e-mobility initiative in North America, which meant that the Suzuki alliance for India was the next logical stopover. In fact, electrification was the main theme at the recently concluded Tokyo Motor Show where journalists who were accompanying Toyota got a fair idea of the roadmap ahead.

It was also during this visit top company officials made clear that the alliance with subsidiary, Daihatsu, would be confined to the ASEAN region and there was little chance of India being part of this plan. Suzuki was the preferred partner for this part of the world though talks were still underway at that point in time.

Now that the first part of the plan in this partnership has been unveiled, it will be interesting to see how the rest of the strategy unfolds in the coming months. What is clear is that this will be focused on the R&D/technology space, which makes the electric car drive a natural fallout, especially with India focusing aggressively on this space.

Going forward, will there be greater bonding in terms of equity where a Toyota and Suzuki could end up being in a far more profound alliance? After all, the entire mobility landscape has been changing rapidly in recent times with new challenges emerging such as autonomous cars, e-mobility and the constant threat to car ownership from the likes of Uber. Suzuki is formidable in India but a small player at a global level, which means that it is better off with a stronger partner in the longer run.

And what better alternative than a fellow Japanese counterpart like Toyota, which is a formidable brand to reckon with worldwide? Suzuki has had its share of allies starting with General Motors decades earlier to the more recent experience with Volkswagen that ended on a sour note. The rationale behind these tie-ups was to hold hands with a stronger partner in a competitive environment but the script did not quite go according to plan.

With Toyota, Suzuki would be in a far happier place in terms of an easier cultural fit and greater empathy. It can tap its stronger ally’s expertise in areas such as electrification to hold its own in a new mobility ecosystem. Toyota, in its turn, would benefit from Suzuki’s astonishing cost-efficiencies that have put it in a position of immense strength in price-sensitive markets such as India. It will be a win-win partnership though the rest of the story will follow very gradually.

After all, Japanese companies are not given to making flashy and dramatic announcements and would much rather keep their cards close to their chests. It is clear that Toyota and Suzuki have just kicked off a journey where the ultimate destination is still some time away. How it eventually unfolds will be interesting to see.

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