GM to double stake in Suzuki

"The strengthened alliance with Suzuki is a critical part of our growth strategy in this region," he said. "We see tremendous opportunities for expanding cooperation in the small-sized end of the car market — especially in Asia but also in other markets."

GM has set itself the goal of 10 per cent market share in Asia by 2004, from just under four per cent currently. Suzuki Motor chairman Osamu Suzuki was no less enthusiastic about potential expansion plans.

"We are going to expand into Asia and then into Oceania," he said. "We want to use GM bases in other countries and we intend to go wherever there looks like there is market."

Under the terms of the planned new share allocation, GM is due to purchase stock in Suzuki for 1,127 yen ($10.52) per share. Investors cheered the decision, sending Suzuki’s shares seven per cent higher to close at 1,135 yen.

The bigger stake for GM represents a bit of a turnaround for Osamu Suzuki, who in the past has wanted to be as independent as possible, and a large measure of success for its easy, indirect approach to working with its Japanese partners.

"It’s a change in mindset and Suzuki obviously feels very comfortable with GM. They are very pleased with the access they’ve had in Europe to Opel, where they have learned a lot," said Enda Clarke, auto analyst at ABN AMRO Securities.

GM also has a 20 per cent stake in Subaru brand-maker Fuji Heavy Industries and a 49 per cent stake in Isuzu Motors Smith, however, emphasised that Suzuki would remain fully independent while Osamu Suzuki, 70, said there would be no further stake increases for GM and brushed aside suggestions that the move was prompted by his age. "I’m Going to be doing this job for another 30 years," he joked.

The two automakers said they would expand cooperation in research and development, purchasing, finance and information systems. They will dispatch about five officials to each other, with GM likely to send a finance official.

They also said would build their Asian strategy car, which goes by the corporate internal name of YGM-1 and will be badged as a Chevrolet, at Suzuki’s Kosai plant in central Japan from September 2001. Initial plans are for 20,000 units a year.

Although many analysts say a Chevrolet badge is unlikely to win over Japanese consumers, who tend to shun US brands, others say GM has few other options as Saturn — the unit it developed to combat Japanese small car imports — has largely flopped here.

Within the Asia-Pacific region, Osamu Suzuki mentioned Indonesia, where Suzuki has an assembly plant, and Thailand, where GM has an assembly plant as well as the Philippines and Australia as possible markets for expansion and cooperation.

GM’s Asia head Rudy Schla is also said there was huge potential in China. "Do we have a joint strategy for China? No. But are we working on a joint strategy for China? Yes." The world automakers are all jockeying for position in Asia, which with countries like China, India and Indonesia contains some of the next biggest growth markets.

Rival Ford Motor Co, which already controls Mazda Motor Corp has become, to GM’s chagrin, the exclusive bidder for South Korea’s Daewoo Motor. In Japan, DaimlerChrysler has recently boosted its clout at Mitsubishi Motors Corp and will send in its own executive as chief operating officer while Renault SA has taken control of Nisan Motor Co.