Confirmed: VW Buys 19.9% of Suzuki's Shares

After months of denial, Volkswagen finally announced that it reached a common understanding with Suzuki Motor Corporation to set up a close long-term strategic partnership that will give the two companies a better positions in several areas of the market. Volkswagen will thus purchase 19.9 percent of Suzuki's issued shares, but the deal is still awaiting authorities' approval, which is expected to come in January 2010.

Furthermore, Suzuki will invest a half of the money received from Volkswagen into shares belonging to the German manufacturer. This will serve as the basis of the long-term alliance, the two companies explained in a release.

Volkswagen and Suzuki believe that each company has what they need to turn the alliance into a key player of the auto sector and "both parties are focused on achieving synergies in the areas of rapidly growing emerging markets as well as in the development and manufacturing of innovative and environmentally friendly compact cars."

The two companies have not provided too many details on their future projects but did confirm that a "compelling solution for customers in emerging markets buying a car for the first time and also for customers in advanced economies seeking to lower their CO2 footprint" is very likely. This basically translates into an affordable model, probably equipped with a small-displacement engine especially optimized for reduced emissions.

"The companies plan a joint approach to the growing worldwide demand for more environmentally friendly vehicles. The management of Volkswagen and Suzuki have concluded that the complementary strengths of each company make for a perfect fit in exploiting their respective advantages as well as rising to the challenge of the global market," VW said in the release.