FRANKFURT (Reuters) -- Volkswagen AG is exploring a potential cooperation deal with Suzuki Motor as a way to boost its expertise in the area of ultra small cars, a source familiar with the matter, confirming a report in manager magazin.
"You have see it through an Asian perspective, particularly a Japanese one. There are vehicle sizes and classes that cannot be found here," the person said.
"You only see them at the Tokyo motor show but it is undoubtedly an interesting segment, just have a quick look at the developing markets like India. It's correct that there is a gap there that could be closed."
A spokesman for Suzuki could not comment, saying he had not heard anything on a potential tie-up, while VW declined to comment.
Ferdinand Piech, Volkswagen's powerful chairman, had signaled interest in Suzuki after praising it when asked at the Polo's media launch last month in Sardinia, which other brands could be added to the group's stable.
Suzuki is benefiting in Japan from the popularity of 660cc ultra small vehicles -- a segment of bite-sized cars it dominates with Toyota's unit Daihatsu Motor Co.
That helped Suzuki and Daihatsu overtake Nissan Motor Co. to become the second and third-ranked brands in Japan after Toyota in the past financial year.
The company also has a dominant patriarch similar to VW's Piech. Osamu Suzuki, the CEO who is in his late 70's, has held the post for the last 30 years and recently reclaimed the position of president, a post he had previously relinquished.
Suzuki is also enjoying success in emerging markets such as India, where its 54 percent unit Maruti Suzuki is the country's biggest carmaker thanks in part to its best-selling Alto -- a tiny model built in India which shares a platform with Nissan's Pixo.
These small cars have served as a major source of growth in markets like India.
Tata Motor's new car that costs just 100,000 rupees, dubbed the Nano due to its tiny size, has provoked a flood of orders and prepayments that helped Tata refinance a $2 billion of bridge loans due this month that was used to fund its expensive acquisition of Jaguar-Land Rover last year.
Earlier today, Germany's manager magazin reported the potential cooperation deal, citing company sources. It said Volkswagen was looking to secure a cooperation deal by taking a stake in Suzuki of 10 percent initially.