The deal between Germany's VW and Japan's Suzuki Motors only reaffirms the fact that small cars hold the key to the survival of the global automakers.

On December 9, 2008, European auto giant Volkswagen AG—which makes such marque brands as Beetle, Golf and Passat, besides boasting of several others like Audi, Skoda and Bentley in its kitty through its holdings in various other group firms across the globe—announced its intention to pick up a 20% stake in Suzuki Motors, Japan's leading automaker, which controls more than half of the passenger car market in India through its Indian subsidiary Maruti Suzuki; the Japanese automaker will in turn own 2.5% stake in VW through cross shareholding valued at around $1.13 bn. The part acquisition boosts VW's India entry, as it aims to topple Toyota to emerge as the world's largest automaker. The acquisition fits perfectly into the scheme of things at VW, which is aiming to bootstrap its presence in the small car market in India, selling 1.6 million small cars in 2009 alone. According to industry estimates, small cars account for over three-fourths of all cars sold in India. With the demand for cars in the developed economies receding to an all-time low, automakers are shifting their focus to emerging economies, particularly China and India. Above all, one could say, one single event that has attracted the attention of global auto biggies is the resounding success of Tata Nano, which was launched last year.

The Analyst Magazine, VW-Suzuki Deal, Small Car Market, Suzuki Motors, Global Auto Biggies, Emerging Economies, World Strategic Models, Emerging Markets, Automobile Industry, Global Automakers, European Groups, Japanese Domestic Market.