Volkswagen and Suzuki are likely to help each other develop an eco-car project in Thailand, according to a source in the automotive industry.
A senior official at the Board of Investment (BoI) confirmed the German and Japanese automakers were negotiating about collaborative possibilities.
Suzuki reaffirmed its stand to go ahead with its 7.5-billion-baht eco-car venture in Thailand at a groundbreaking ceremony for a new plant late last year.
Volkswagen, Europe's largest automaker, was among seven automakers applying for promotional privileges from the BoI. The state agency approved the proposals of six companies but asked for additional details from the German automaker.
The industry source said that Volkswagen had now embarked on a new push and was negotiating with Suzuki about jointly developing the small, fuel-efficient cars in Thailand.
The move came after both automakers recently established a long-term strategic partnership under which Volkswagen bought a 19.9% stake in Suzuki and the Japanese automaker in turn invested up to half of the amount received into shares of Volkswagen.
Volkswagen hopes to tap Suzuki's established product strength in small cars and Suzuki's strong market in Southeast Asia under the agreement.
The source said it was not clear, however, whether the negotiations under way between Volkswagen and Suzuki would lead to decisions to make eco-cars jointly or separately.
Co-operation is possible in areas such as the supply chain, parts procurement, shared production facilities and distribution no matter what form of investment will result from the negotiations.
Suzuki's eco-car investment in Thailand involves building the facilities for pressing, welding, painting, assembly and engine production.
The Japanese automaker is due to start producing eco-cars with 1.3-litre gasoline engine from early 2012, initially at 10,000 units per year.
Seventy percent of its cars would be sold locally and production should hit 100,000 units per year in the fifth year of operations, as required by the BoI.
Details of Volkswagen's plan have not been announced but the source said if Volkswagen developed its project alone, the investment was expected to be worth as much as 26 billion baht.
