Volkswagen buys into Suzuki

Only a week after sealing a deal to take control of Porsche, Volkswagen's insatiable appetite for acquisitions continues, this time buying one fifth of Japanese automaker Suzuki. The move is a clear indication of the German firms push into small cars and opens the possibility of South East Asian plants building future VWs.

According to an official statement, "Volkswagen AG and Suzuki Motor Corporation have reached a common understanding to establish a comprehensive partnership".

In order to allow a "smooth development" of the new relationship, Volkswagen AG will purchase 19.9 per cent of Suzuki's issued shares. The deal is expected to be complete in January 2010, and Suzuki says it will re-invest half of this amount back in Volkswagen, bringing the two companies into a closer orbit.

Both companies issued statements that centred on 'small cars' and 'carbon footprints', foremost in VW's mind at present with the Up! concepts a regular at motor shows.

VW currently has no factories in South East Asia so the tie-in with Suzuki is ideal from the German company's point-of-view. Building the new Up! family of vehciles in Asia would no doubt help keep the final price low, allowing it to slot perfectly underneath the Polo, and don't be surprised if more VW models end up being produced in the region.

As far as Suzuki's side of the deal goes, expect the company to benefit from VW's engine technology, especially diesels, to enhance the Japanese's brands line-up in the future.

We'll bring you more details as they emerge.

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