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Business deals

It's Africa next for Toyota-Suzuki tie-up

Japanese partners eye growing demand for smaller cars on continent

Toyota Motor, already a market leader in much of Africa thanks to sales of larger vehicles, will work with Suzuki Motor to cultivate demand for mass-market cars on the continent.

NAGOYA, Japan -- Toyota Motor and Suzuki Motor will expand a partnership in India and extend it into Africa, supplying the continent together in order to cultivate demand for smaller vehicles.

The Japanese automakers revealed three new areas of collaboration Friday. Toyota and group parts supplier Denso will support Suzuki's development of high-efficiency small engines. Toyota also will produce Suzuki-developed cars at its southern India plant, selling them in the country under both brands. And the partners will market India-built Suzuki cars in Africa.

Toyota performs strongly in Southeast Asia, commanding a roughly 30% market share in Thailand. But the company holds only about a 3% share in India -- which has become one of the largest auto markets -- because it offers few products in the popular low-price compact segment. Working with Suzuki helps Toyota step up its game in emerging markets where it lacks a much of a presence.

In Africa, Toyota leads the market in the majority of sub-Saharan countries including South Africa. The automaker boasts a long history in the region, selling the Land Cruiser there since the 1950s. Toyota has developed its sales network there, and the company's durable products are popular in places where transportation infrastructure remains underdeveloped.

Governments and businesses are major buyers, and sport utility vehicles and other large autos have sold well. But Toyota expects growth in consumer demand for cars, which makes the success of its strategy for developing a lineup of smaller vehicles crucial. Africa's population is projected to roughly double by 2050 to reach 2.5 billion. Toyota seeks to maintain its position as market leader there to ensure growth potential down the road.

The two automakers have worked together in India since February 2017, where Suzuki is slated to supply Toyota with electric cars going into production around 2020. As soon as next spring, Suzuki intends to supply locally built compacts to Toyota in India, while Toyota supplies hybrids to Suzuki.

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