Volkswagen recently announced that it is acquiring a 19.9% stake in Japanese auto maker Suzuki, adding to the veritable food court of brands under its wing. At a time when other manufacturers are scrambling to pay the bills, why is Volkswagen going on a shopping spree?

Probably because it is a good time to buy and because this deal makes sense for both parties. Volkswagen is sitting on a pile of cash and is anxious to expand its market share across the globe and unseat Toyota as the world’s biggest car maker. China and India are, and will continue to be, the fastest growing car markets on the planet. VW is already strong in China while Suzuki practically owns the Indian market. Combined, they could become a juggernaut in these all-important markets.

Suzuki knows how to build small cars for emerging markets but needs access to “green” technologies to meet increasingly stringent environmental regulations, technologies at which VW excels. VW also has a high profile and credibility in the U.S. market, something that Suzuki lacks. An association with Volkswagen could get American buyers to take Suzuki more seriously.

A win-win for both.

--M.D.