In another move to enhance its Asian presence, General Motors Corp. of the United States will invest 140 billion yen to obtain a 20 percent stake in Fuji Heavy Industries Ltd. as part of a strategic alliance, top officials of the two automakers announced Friday. Fuji Heavy will become the third Japanese automaker that GM, the world's largest automotive group, has bought into. The American automaker already has stakes in Isuzu Motors Ltd., a bus and truck maker, and Suzuki Motor Corp., the country's No. 1 mini-vehicle maker. Meanwhile, in a related move, Fuji Heavy and Suzuki announced that they have agreed to form a strategic alliance to strengthen their businesses in wide areas including design, engineering and manufacturing. The two firms will mutually obtain 10 billion yen of each other's stock but will not cooperate in sales, aiming to maintain their competitiveness, they said. The two latest developments in the auto industry are expected to substantially boost GM's presence in the Japanese market. "The strategic alliance (with Fuji Heavy Industries), which we are announcing today, makes each of us stronger," said G. Richard Wagoner Jr., GM president and chief operating officer. "It leverages our strength in key areas of vehicle technology and products, manufacturing and distribution. Both Fuji and General Motors are in a better position to grow profitably in the increasingly competitive automotive industry," he said. Under the agreement, GM will invest 140 billion yen in March to acquire a 20 percent stake in Fuji Heavy Industries through third-party allocations of about 164.5 million new issues. When the deal is completed, GM will be a leading shareholder of the Japanese automaker. Wagoner stressed that the two companies are complementary and the alliance with Fuji Heavy Industries will help GM strengthen in the field of four-wheel-drive vehicles as well as small- and midsize cars. Although Fuji Heavy Industries, known for its Subaru brand vehicles, is a midsize automaker with the 1.35 trillion yen in consolidated sales in fiscal 1998, the automaker has strong technical expertise in four-wheel drive vehicles and continuously variable transmissions (CVT). Takeshi Tanaka, president of Fuji Heavy Industries, said the Japanese automaker will be able to maintain its independence in management even in teaming up with the world's largest automotive group. "We have been seeking a way to utilize our technological expertise (in the alliance) and put a priority on maintaining our independence in management ... We can also expect that our four-wheel drive technology and CVT will play a central role in the GM group," Tanaka said. Tanaka also stressed that the alliance with GM will bring access to GM's advanced technology in the field of environmentally friendly technology and intelligent-transport systems. This would help Fuji Heavy Industries cut back on development costs in those fields and focus on its strength. The alliance covers such collaboration as Fuji's providing four-wheel drive technology to GM, development of GM cars based on Fuji's existing platform, the utilization of mutual manufacturing facilities. The two firms will work out the details of the cooperation at an alliance strategy committee, the officials said. The firms will also mutually exchange executive officers in the near future. In a separate news conference announcing his firm's alliance with Suzuki, Tanaka acknowledged that GM suggested recently that Fuji Heavy discuss the strategic partnership with Suzuki. Under its deal with Suzuki, the two firms will set up a special committee led by the two presidents next year to discuss details of their collaboration measures including joint use of their factories. Suzuki President Osamu Suzuki said that as a basic cooperation, the companies should try to find ways to use common auto parts to reduce production costs of their cars. Fuji Heavy Industries and Suzuki have conducted joint businesses since 1995, including Suzuki's supplying the partner with automatic transmissions for small cars. The presidents of the two companies, however, denied the possibility of a future merger. "The broad alliance with Fuji Heavy is necessary for a small car maker like Suzuki to survive in the global automotive market that is becoming more competitive," Suzuki said.
