GM Sells Much of its Equity in Suzuki
Photos
Two Automakers will Continue to Work Together in Future
Yesterday, General Motors announced that it would be selling off its shares in Suzuki Motor Corp., reducing its equity in the Japanese automaker from 20.4 percent to just 3.0 percent. In monetary terms, the 17.3 percent difference equates to some 92.36 million shares, each valued at 2,500 Yen, worth an estimated $550 to $750 million after applicable taxes and credits.
The GM-Suzuki partnership started twenty-five years ago in 1981 when GM purchased a 5.5 percent stake in the Japanese small car manufacturer, but that number dwindled to 3.5 per cent by 1985. During the first few years, the two worked to build the efficient and economical Swift/Sprint/Firefly, and shortly thereafter, variants of Suzukis Sidekick compact SUV.
By 1998, GM and Suzuki were well into their relationship; they owned a significant portion of the economy car market through successful subcompact cars and SUVs, not to mention the construction of the CAMI joint-venture manufacturing facility, located in Ingersoll, Ontario, Canada. That year, General Motors bumped its shares in the brand up to 10 percent, and in 2001, added another 10 percent. These additions came as little surprise; General Motors used Suzukis products to bolster its presence in Asia.
“GM has a great deal of respect and admiration for Suzuki based on our long and productive history of working together,” said Rick Wagoner, GM chairman and CEO. “Our relationship is strong, and we look forward to our continued partnership. This transaction will allow us to preserve our business relationship, while further building up GMs already significant liquidity position during this critical phase of our turnaround.”
Despite selling the stocks, GM will continue working with Suzuki in a technological and production alliance. In recent times the two automakers worked together to develop hybrid and fuel cell technology, not to mention further investment in the update of the CAMI plant, for the production of Chevrolets Equinox and Pontiacs Torrent midsize SUVs. GM will also continue to use Suzukis economy and compact cars for its Asian market.
While nothing will change in the immediate future concerning the development of joint Suzuki and General Motors projects, it is expected that Suzuki will grow more autonomous with future products. As it stands, Suzuki is the sole proprietor of the new and vastly improved Vitara, not to mention the Hungarian-built SX4 crossover, which it co-developed with ex-GM partner Fiat. Could it also mean that Suzuki will bring over the European-market Swift to North America? Its global products would prove highly successful in the fast-growing North American B-Segment marketplace, not to mention the fact that it isnt particularly pleased with the quality and reliability of its GMDAT products.
While our fingers are crossed for new and different cars, its important to keep in mind that Suzuki owns a 10 percent stake in Daewoo (GMDAT), the purveyor of the Aveo/Wave/Swift+ (Wave/Swift+ in Canada only), the Optra/Forenza (Optra only in Canada, while the Forenza is only in the US), and the Verona/Epica (Verona in both markets while the Epica is in Canada and other markets). This is, of course, doesnt take into consideration the high price of labor and shipping for its European-built machines. Nevertheless, this newfound freedom should give Suzuki greater independence and open new doors.
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| 2005 Suzuki Forenza S | Avon, NY | Price: $7,495 | |
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| 2006 Suzuki Forenza | Norristown, PA | Price: $7,999 | |
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