Analysing the Kawasaki and Suzuki joint venture

It may sound strange, but you may soon be able to buy a ZX-9R with GSX-R1000 parts, or even a GSX-R600 with a derivative of the 636cc ZX-6R engine after Suzuki and Kawasaki announced its tie-up last week.

The two have teamed up to take on Honda and Yamaha – and they’re not ruling out the chance of developing a hybrid sports bike sharing the best of both worlds. Initial plans will see the pair produce scooters, customs, quads and off-road bikes devised, developed and built by the companies’ best brains working in unison. And Hiroaki Suzuki, the official spokesman who shares his name with his employer, admits race replicas could be in with a shout, too. He said: ” We are not co-operating on sports bikes, but we could change our policy in time.

” We will be exchanging engineering info with each other and that will reduce our development costs by half. We are hoping to have our first joint model in two years. ”

Exactly when a sports bike might appear will depend on the collaboration’s success in the other markets. But it should be possible to start measuring that success within three years. The first jointly-developed bike is due to go on sale in 2004 and will almost certainly be followed by many more in quick succession.

According to the Japanese bike press, Suzuki is in charge of scooter production and quads under 600cc. Kawasaki takes the reins in the cruiser and motocross sectors. And the pair will begin to work together next Spring. Their race divisions will still remain separate, however.

Initially, many believed the collaboration would mean shared R&D, but very different models going on sale. However, Suzuki san hinted that the main difference between some of the smaller models might be little more than their badge. He said: ” We haven’t finalised how it will work yet, but it is possible we will develop one bike and make it available as either a Suzuki or Kawasaki. One version will have Suzuki paintwork and decals, and another will have Kawasaki. ”

A statement from Kawasaki Heavy Industries says marketing and sales will be kept separate and each firm’s branding ideas and sales networks will be retained. But both companies ” are going to collaborate with each other in product development, joint-purchasing, manufacturing and the commonisation of parts and components. ”

The tie-up was announced at a conference in Japan. And it was stressed that there is no merger, no exchanging of cash, nor the partial acquisition of one by the other.

Instead, both companies recognise the growing threat from other manufacturers and, independently, were searching for a partner.

It’s not an unusual story. As you’ll see from our graphic (right), it’s common within the European bike industries. Several key players have fingers in most pies, but you’d never know it. And in the car world, partnerships and even mergers and buy-outs have been common for years.

For instance, the VW Group comprises names like Audi, Seat, Skoda and even Lamborghini and Bugatti. Elsewhere, Mercedes is linked with Chrysler, while Ford’s empire includes Volvo, Jaguar and Aston Martin.

Suzuki said: ” The bike industry in Japan is facing serious competition from the rest of the world, especially China, so the demand for bikes here is not expanding. We were looking for another firm to join with and Kawasaki was looking as well. We found each other. ”

The pair also recognise that, despite producing some of the top models, their market share remains small against Honda and Yamaha. Those have a combined stronghold on the Japanese market of 80 per cent (52.2 per cent Honda, 30.2 per cent Yamaha), compared with Suzuki’s 14.6 per cent and Kawasaki’s meagre three per cent. According to an auto analyst at Commerz Securities in Tokyo, the domestic decline is likely the ” principle motivator ” for the alliance. Japanese bike makers also face problems around the rest of the globe. Their combined share of the Euro market has dropped from 80 per cent in 1996 to 50 today, as European firms improve and expand their ranges. And in America, the share of the market has fallen 10 per cent in the last 10 years thanks to increasing brand loyalty shown to the likes of Harley.

But these drops are small compared to what’s going on in the Chinese, Indonesian and Thai markets, where demand for cheap bikes is at an all-time high. More than 11 million were sold in these countries last year and, while the Japanese firms used to enjoy a huge market share, the majority are now being made by Chinese firms. Suzuki alone has seen its share of the market plummet by 70 per cent in 2000. Lower production, material and labour costs in China are being blamed, as well as copyright infringements on designs first developed years ago in Japan. And if that sounds bleak, there’s worse. Twenty years ago, during biking’s 1981/82 heyday, the ” big four ” shipped 3.3 million bikes out of Japan. That fell to 774,000 in 2000/01 – a 75 per cent drop.