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Toyota, Suzuki see tie-up as way to survive in competitive global auto industry

Toyota Motor Corp. and Suzuki Motor Corp. are exploring the possibility of forming a business tie-up -- a move that reflects their sense of crisis that they could not otherwise survive in the global auto industry in which competition to develop new automotive technologies such as self-driving cars is intensifying.

In the face of fierce competition to develop new technologies for their survival, Toyota, which is lagging behind U.S. and European automakers in diffusing technologies in the global market, and Suzuki, which is faced with difficulties in developing advanced technology, share common interests. The two companies' move is likely to accelerate efforts among automakers to form business tie-ups with others in the industry as well as with companies in other fields such as information technology firms.

At a news conference held in Tokyo on Oct. 12, Suzuki Motor Corp. Chairman Osamu Suzuki revealed challenges his company is facing, saying, "There is a sense of crisis that making high-quality, but cheap, cars could come to a deadlock."

Suzuki, which is good at producing low-price vehicles, holds large market shares in emerging economies such as India, but the size of the company is small compared to major global automakers. There are limits to what Suzuki can do on its own in developing next generation environment-friendly vehicles as it costs a huge amount of money to do so.

In 2009, Suzuki tied up with Germany's Volkswagen to cooperate in fields such as environmental technology, but the relationship between the two automakers became strained as Suzuki increasingly became dissatisfied with what it said was Volkswagen's failure to provide sufficient technology. The two companies scrapped their tie-up agreement in 2015. Suzuki, which is struggling to survive on its own, has come under pressure to look for a new partner.

Chairman Suzuki said at the news conference, "I consulted with Toyota's honorary chairman (Shoichiro Toyoda) in early September (on a tie-up)." The two companies are run by their respective founding families. The firms were also first started in the Enshu district in western Shizuoka Prefecture. When Suzuki Motor became unable to comply with new emission regulations in the 1970s, Osamu Suzuki asked former Toyota president Eiji Toyoda to supply engines. The good relationship between the two founding families gave the two automakers a push to hold tie-up talks.

Furthermore, Osamu Suzuki, who has been running the company with a strong leadership style, is now 86. In June 2015, he passed the mantle of the presidency to his eldest son, Toshihiro. Suzuki's decision to hold tie-up talks with Toyota apparently underscores the intention of Suzuki's new management to solidity his company.

Meanwhile, Toyota has been rushing to conduct research and development on advanced technologies, for example, by setting up a development center for artificial intelligence in the Silicon Valley, but it is facing stiff competition from its American and European rivals. Ford Motor Co., for example, has announced a plan to offer fully self-driving vehicles by 2021.

Relevant authorities of governments in the world are discussing creating unified safety standards and regulations for new automotive technologies. For automakers, the fate of their survival is likely to be determined by whether they will be able to spread their own products throughout the world and have their own technologies adopted as global standards. To that end, each automaker is making efforts to build cooperative relations with other firms. A senior Toyota official said, "The larger the number of partners we can get to jointly develop technologies, the easier it becomes for us to take the initiative."

However, the world's top automaker says Toyota is lagging behind American and European companies in finding partners and creating standards. Toyota plans to be open to collaborating with other companies in addition to Suzuki.

Toyota and Suzuki have yet to decide whether to forge a capital tie-up at the present moment. Asked whether there is a possibility of Suzuki going under the umbrella of Toyota Motor, chairman Suzuki dropped a hint, saying, "I will take time to think about it."

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