Suzuki Adapting to Shrinking Market

Will supply small cars for Mitsubishi Motors

Japan's Suzuki Motor will supply compact vehicles to Mitsubishi Motors in their domestic market, the two firms said on Dec. 23, as automakers explore ways to survive in a shrinking market.

Suzuki will offer 800 Solio vehicles to Mitsubishi Motors a month, under an original equipment manufacturer (OEM) deal.

"The OEM supply is expected to generate new customers" for Mitsubishi by strengthening its product lineup, the statement said.

With the deal, "Suzuki aims to improve its productivity and lower production and development costs through further increasing economies of scale", it said.

Compact vehicles have gained popularity in Japan because of their fuel efficiency and small size allowing easy driving through narrow Japanese roads.

The Suzuki-Mitsubishi deal is the latest in a series of tie-ups and alliances among major Japanese automakers as they struggle to stay profitable in a slumping domestic market with a falling population.

Earlier this month, Mitsubishi and Nissan Motor announced an expanded partnership agreement, with a special focus on cooperation on mini-vehicles in Japan and compact automobiles in the global market.

The Japanese new vehicle market is bracing for a sharp fall next year, after some of the government's green-car incentive programs ended this year.

Japanese automakers have been shifting production and sales overseas, particularly to growing Asian markets, as younger Japanese consumers avoid car purchases due to the high costs of fuel, maintenance and tax.

Copyright Agence France-Presse, 2010

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