General Motors' decision to strengthen its ties with Suzuki was foreshadowed by the decision to use a Suzuki platform for GM's sub-Corsa car.
GM has agreed to spend $317 million to raise its stake in Suzuki Motor Corp. to 10 percent from 3 percent.
Earlier, the companies agreed to work together on the small car. Suzuki in Hungary and Opel in Poland will build a car based on Suzuki's Wagon R, beginning in 2000. It will be sold in Europe and Asia.
Turning over the little car to Suzuki was strategic, said Opel sources in Germany. It was part of GM's long-term goal of building strength in its partners. In the same way, GM has turned over diesel engine development to Isuzu.
The additional investment covers a wide-ranging alignment. The companies agreed to combine their efforts in global manufacturing, to look into trading advanced technologies, and to give Suzuki lead responsibility for developing small cars and minis, especially for emerging markets.
'GM can take advantage of us,' said Suzuki President Osamu Suzuki, 'and we can take advantage of them.'
Daewoo, which has been trying to attract a GM investment without giving up power, appears to be a loser.
'Suzuki is the center of expertise for minis and small cars,' said GM Chairman Jack Smith. 'We'll have one-off arrangements (with Daewoo on specific projects), but the center of expertise will be Suzuki.'
Smith said GM sees a need for personal transportation that is 'quite small,' as well as a rugged rural utility vehicle, perhaps with a power unit that could be taken out 'to work in the fields, pump water, and so on.'
Suzuki and Opel will talk about engine strategies. Suzuki could be involved in engines sized from 650cc to 2.5 liters. In the past, engines have been a divisive subject. Opel and Suzuki will each use their own in the joint-venture car they are building in East Europe.
The closer ties are a direct result of the DaimlerChrysler merger.
As President Suzuki was arriving in Detroit for his annual in-person earnings report to GM executives last spring, he saw news of the Daimler-Chrysler deal on his television.
At the GM offices the next day, he and Smith began talking about the implications of DaimlerChrysler. Before long, they decided it was time to go beyond the occasional joint project and look at their ties more broadly.
Given their past history, said Smith, 'it was rather easy to put this together.'