VW-Suzuki deal is 'significant'

VW Group chief Martin Winterkorn has said that the recent buy-in to Japanese firm Suzuki is of "paramount significance" to both manufacturers.

VW took a 20 per cent stake in Suzuki late last year - with VW chief Ferdinand Piech saying that he'd been attracted by Suzuki’s cutting-edge supermini technology, better presence in emerging markets - and motorbikes.

The latter comment has sparked speculation that the VW Group could be considering building two-wheeled vehicles to accompany its burgeoning range of cars, vans and trucks.

Winterkorn said that VW and Suzuki are planning to work on joint projects. "We have set up a joint project office in Wolfsburg to coordinate cooperation," he said. "Work on concrete ideas and vehicle projects will begin in the coming weeks."

VW has announced that it will use a bond and share sale to raise funds it needs to help its aggressive new-model and acquisition-based push to dethrone Toyota as the world's biggest car manufacturer within the next 10 years.

Suzuki on the other hand has confirmed that isn’t going to launch a cheap car to compete with the Tata Nano in developing countries, despite facing a grave threat in India – one of its best-performing markets.

The Nano will undercut the many models offered in India by Maruti Suzuki, who together control more than 50 per cent of the market. But Suzuki boss Osamu Suzuki says a car cheaper than its current models “wouldn’t be a car any more”.

Suzuki is worried about watering down safety and comfort standards in a super-cheap model. Even details like switching to a cost-saving single windscreen wiper will erode those standards, the Japanese company reckons.