Nissan Motor Co. and Renault SA of France announced a business and capital tie-up agreement with Daimler AG of Germany on April 7. In December, Suzuki Motor Corp. and Volkswagen AG of Germany struck a capital tie-up deal. The auto industry is undergoing sweeping transformation as markets in developed countries show signs of shrinking and demand for environment-friendly cars grows.

The Volkswagen-Suzuki alliance is now the world's No.1 in terms of the number of units sold (8,644,000 cars in 2009), Toyota Motor Corp. the No. 2 (7,810,000 units) and the Nissan-Renault- Daimler alliance the No. 3 (7,636,000 units). Toyota, which became the No. 1 automaker in 2008, is now making strenuous efforts to rebuild its reputation after the damage suffered from recall problems. The Volkswagen-Suzuki and Nissan-Renault-Daimler alliances show that the carmakers are trying to become more competitive by utilizing each other's technological strengths.

For example, Daimler, which enjoys strong brand recognition for its large luxury cars, is lagging behind in the development of fuel-efficient compact cars and electric cars but its low-pollution diesel engines are attractive to Nissan and Renault. Nissan is strong in the development of electric cars.

Suzuki hopes to strengthen its "green" technology by utilizing Volkswagen's expertise on hybrid and electric cars. Volkswagen wants to further strengthen its presence in emerging economies by utilizing Suzuki's superior knowledge of low-priced minicars. Suzuki has a strong presence in India, while Volkswagen is strong in China.

As governments try to fight global warming and reduce reliance on oil, fuel-efficient and environment-friendly cars will be of greater importance to the car industry. (Europe, for example, will introduce strict regulations on carbon dioxide emissions in 2012.) For carmakers, it will be essential to be flexible and have the ability to adapt to meet the needs of individual customers and society as a whole.