Toyota considers Daihatsu buyout for $3.2bn

Toyota Motor Corp. said on Wednesday it was considering buying out the rest of mini-vehicle maker, Daihatsu Motor Company, for $3.2 billion deal at current market prices.
In a statement in Tokyo, Japan, Toyota also denied a report that it was in partnership talks with Daihatsu’s rival- Suzuki Motor Corp.
“We are constantly considering a number of possibilities relating to Daihatsu, such as partnerships or business restructuring, including making the company a fully owned subsidiary,’’ Toyota said.
It, however, said that no decision had been made.
As a result, shares in Daihatsu soared 20 per cent in late Wednesday trade after being overwhelmed by buy orders throughout the day.
Shares in Suzuki jumped by 11 per cent despite denials from both Toyota and Suzuki.
Toyota rose by 3.6 per cent.
Full control of Daihatsu could help Toyota leverage the lower-cost brand better and cut procurement costs for Daihatsu.
Ties with Suzuki would help the world’s largest automaker make inroads into India where Suzuki commands around half the passengers’ car market.
Toyota owns 51.2 per cent of Daihatsu, which like Suzuki, specialises in 660cc mini-vehicles, a segment particular to Japan, as well as compact cars.
“I can easily see the Daihatsu brand used in the same way that VW uses Skoda or Renault uses Dacia or Nissan uses Datsun as a low-cost, sub-premium brand to the core brand,’’ CLSA Senior Research Analyst, Christopher Richter said.
“That could be a very effective weapon against Suzuki in places like India. If I were Suzuki, that would sound like a risk to doing business with Toyota,’’ Richter said.
Still, others noted that a potential Toyota-Suzuki partnership could benefit both automakers.
Suzuki, through its control of Maruti Suzuki India Ltd, has a vast distribution network in India that Toyota could greatly benefit from.
Suzuki is expected, however, to tread carefully with any new tie-ups.
It formed a capital alliance with Volkswagen AG in early 2010 but relations soon soured, leading to years-long dispute in an arbitration court that ended last year with the unwinding of their cross-shareholdings.