Suzuki, VW, SAIC likely to create three-way JV in China

Shanghai, July 26 (Gasgoo.com) Suzuki Motor is currently in talks with Volkswagen AG and SAIC Motor to set up a three-way joint venture in China on the basis of the Shanghai Volkswagen Co, a top executive from Suzuki's Chinese partner, Changan Auto, revealed today.

Suzuki has been in negotiations with several Chinese firms for the establishment of a new joint venture, Suzuki Motor (China) Investment Co., Ltd. announced earlier this month.

Moreover, in March this year, Suzuki China relocated its 15-year-old office in Beijing to Shanghai's Anting town. Even prior to March, Volkswagen announced that it would pay $2.5 billion for 19.9% stake in Suzuki Motor.

How much stake each side is going to get is still unknown, but it is expected to be the way as Changan-Ford-Mazda has been holding the stake at the venture in which Changan holds 50%, Ford 35% and Mazda 15% respectively. At present, Volkswagen has acquired 19.9% stake in Suzuki.

Apart from that, an insider from Suzuki China said the company plans to produce the imported Suzuki Grand Vitara SUV at the new joint venture.

Although Suzuki has been present in the Chinese market for over 17 years, compared with Honda, Toyota and Nissan, Suzuki's total sales in China, including the two brands Changan Suzuki and Changhe Suzuki, performed poorly and sold no more than 250,000 units in 2009, according to media reports.

Therefore, setting up a new joint venture is easier for Suzuki to break the bottleneck on sales than to improve Changan Suzuki and Changhe Suzuki's performance, an analyst said.