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A Reuters report out of Tokyo this morning quotes an unidentified source as says that Volkswagen is exploring a cooperation deal with its Japanese rival to boost the German carmaker's presence in ultra-small cars.


Cooperation with Suzuki, which dominates Japan's 660cc minivehicle market along with Toyota unit Daihatsu Motor Co., could yield a new model for Volkswagen, the source said.


Volkswagen is looking to secure a cooperation deal by taking a 10 percent stake in Suzuki, reported manager magazin, a German magazine. But some investors were wary.


"If they are really going to make cars together, bringing together production facilities and linking their logistics, this could help both, but a capital tie-up by itself will not stimulate demand," Kazuyuki Terao, director at investment fund RCM Japan, told Reuters.


"Suzuki's profits are coming mainly from India and Japan. Europe doesn't have a big impact," he said.


Suzuki's 54 percent Indian unit Maruti Suzuki is that country's biggest carmaker thanks in part to its best-selling Alto mini car (pictured).


"It's not a negative, as there is a limit to doing things on one's own in an auto market like this," Naoki Fujiwara, a fund manager at Shinkin Asset Management, told Reuters. "But I would have to take a look at what they actually do."


A spokesman for Suzuki could not comment, saying he had not heard anything on a potential tie-up, while Volkswagen declined to comment.


Mitsuru Kurokawa, an analyst at IHS Global Insight, told Reuters today that collaborating with Volkswagen "could help Suzuki pick up its pace in the hybrid and electric vehicle field as those segments look set to grow faster than expected now.


"Meanwhile, Volkswagen could gain a partner in Asia that it always wanted and develop smaller cars as consumers downshift more and more from bigger cars."

Tags: Emissions, Fuel Economy, Suzuki, Volkswagen, Joint Venture, Small Car, Suzuki, Volkswagen

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Volkswagen Said to Be Mulling a Super-Small-Car Joint Venture With Suzuki was originally published by Green Car Advisor. Read the full story by clicking here.