VW and Suzuki prepare to tangle in India

TOKYO -- After their acrimonious split, Suzuki and Volkswagen are poised to square off face to face in one of the biggest, most promising auto markets -- this time with different partners.

The battleground is India, and the brewing showdown pits Suzuki and its new teammate, Japanese giant Toyota Motor Corp., against Volks-wagen AG and Indian heavyweight Tata Motors, signed on just this month as the German juggernaut's new partner.

The stakes are high for VW and Toyota. Neither of the world's two biggest automakers has a firm foothold in India, and both are jousting for local partners to make inroads.

Building sales there is key to both companies' global expansion plans and could undergird worldwide profits.

Passenger vehicle sales in India expanded 12 percent to 2,789,678 units in fiscal year 2016, from fiscal year 2011, according to the Society of Indian Automobile Manufacturers.

Sales grew 8.6 percent in the first nine months of the current fiscal year through December 2016, making it one of the fastest-growing big markets in the world.

Aiming to tap that growth, Volkswagen on March 10 signed an accord with Tata to explore long-term cooperation in jointly developing vehicle components and vehicle concepts. They will also pursue other business opportunities in India and emerging markets.

VW's Skoda brand will lead the work with Tata, VW said in a statement.

The announcement came just a day after Toyota President Akio Toyoda and Suzuki Chairman Osamu Suzuki met with Indian Prime Minister Narendra Modi to discuss their plans for India.

Suzuki, through its local subsidiary Maruti Suzuki India, is the leading player in India, with nearly half the local market share. The Japanese automaker expects India to be the world's third-biggest car market by 2020, Managing Officer Kinji Saito was quoted as saying this month at the Geneva auto show by the Press Trust of India news agency.

In their March 9 meeting with the prime minister, Toyoda and Suzuki discussed plans to cooperate in India by taking advantage of Toyota's expertise in advanced technology and Suzuki's experience in small car manufacturing, the prime minister's office said in a news release.

They also talked about manufacturing components locally and export possibilities.

The announcements highlight the swift shift in auto alliances after the breakup of the dysfunctional VW-Suzuki alliance in 2015. VW's demand for access to India through Suzuki and Suzuki's demand for advanced technology from VW were issues scuttling that union.

Culture clashes between the German and Japanese sides also contributed to the mistrust.

Toyota swooped in to fill VW's shoes with Suzuki.

Last October, the Japanese automakers announced they would explore their own alliance, and they agreed last month to begin concrete talks.

Toyota is seen as benefiting from Suzuki's India stronghold, while Suzuki is expected to gain technological aid.

VW's alliance with Tata is another run at India after its Suzuki strategy fell apart. Tata, known for its budget-minded Nano subcompact, is also the owner of Jaguar Land Rover.

There was no mention of any alliance impact on Jaguar Land Rover when the Tata-VW link was announced.

The contractual framework of the VW-Tata partnership and details about areas of cooperation will be hammered out over the coming months, VW said.