Suzuki has said that it has agreed to take an equity stake in the new Daewoo Motor company being set up by GM following its agreed purchase of Daewoo Motor assets.

Local media reports indicate that stake is likely to be around 15%. Altogether, the investment by GM and its partners is expected to amount to around $420 million. Other partners in the venture could include the troubled Fiat Auto (now scaling down its involvement due to financial pressures) and China’s Shanghai Automotive Industry Corporation (SAIC), which has said that it has been in talks with GM about participation.

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The involvement of Suzuki (20% owned by GM) in the new Daewoo company is being viewed as strategically significant, allowing Suzuki to strengthen its market position in South Korea and Asia as a whole, whilst also reinforcing GM’s plans to integrate operations across the region.

Suzuki’s strength in small cars suggests that it could play the lead role in developing a future small car platform that would also be utilised by Daewoo. Parts procurement savings could also be sizeable in the future.

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