KYODO NEWS - Aug 28, 2019 - 20:53 | All, Japan

Toyota Motor Corp. and Suzuki Motor Corp. said Wednesday they have agreed on a capital tie-up to jointly develop advanced technologies necessary for autonomous vehicles, amid intensifying competition with rivals.

Under the deal, Toyota will acquire a 4.94 percent stake in Suzuki for about 96 billion yen ($907 million), while Suzuki plans to hold a Toyota stake worth about 48 billion yen.

With the tie-up, Japanese automakers will be divided into three camps -- the group of Toyota, joined by Mazda Motor Corp. Subaru Corp. and Suzuki, the alliance of Nissan Motor Co., Renault SA and Mitsubishi Motors Corp. and Honda Motor Corp.

Toyota has already obtained a 16.8 percent stake in Subaru and 5.1 percent of Mazda shares.

"The two companies intend to achieve sustainable growth by overcoming new challenges surrounding the automobile sector by building and deepening cooperative relationships in new fields," they said in a statement.

In light of the global auto industry facing a "turning point unprecedented in both scope and scale" from new entries from other industries and tightening environmental regulations, the two said they intend to form a "long-term partnership."

Suzuki Chairman Osamu Suzuki told Kyodo News that he asked Toyota President Akio Toyoda for a capital partnership in May.

"A big wave of self-driving is coming," Suzuki said. "As costs can't be reduced without mass production, uniting for a common purpose is needed."

In recent years Toyota, the leading Japanese automaker, has been teaming up with smaller rivals and tech giants, including Softbank Group Corp., as competition to produce self-driving and electric vehicles intensifies.

"We are facing a once-in-a-century transformation," the Toyota president, who is eager to transform the automaker into a "mobility company," said at an annual shareholders' meeting in June.

Much smaller rival Suzuki, which has strength in making compact cars, has lagged in the development of next-generation technologies because of the huge costs needed for research and difficulties in competing on its own in the global race.

Toyota and Suzuki agreed in February 2017 to launch negotiations for a business partnership in areas such as environmental, safety and information technologies. Since then, relations between the two Japanese automakers have grown closer.

Under the deal struck last year, the automakers said they plan to mutually supply their cars in India, where Suzuki has a strong footprint.

For its part, Suzuki will offer Toyota locally manufactured vehicles such as the Baleno compact car and the Vitara Brezza compact sport utility vehicle, while Toyota will provide Suzuki with its Corolla sedan.

Toyota's global vehicle sales stood at 10.59 million units in 2018 including those of its subsidiaries such as minicar maker Daihatsu Motor Co. and truck and bus producer Hino Motors Ltd. Suzuki sold 3.33 million units worldwide.