German automaker Volkswagen, which has picked up an almost 20-per cent stake in Japan's Suzuki Motor Corp, is likely to source small cars from Maruti Suzuki India Ltd (in which Suzuki has 54 per cent stake) and sell them in Europe under the VW brand name.
While Suzuki has the technology for small and compact hatchbacks, Volkswagen will share its green expertise, which it uses to build hybrid cars that have become popular in the West, with Suzuki.
''Europe is shifting to compact and small cars due to rising petrol costs as well as concerns of climate change. Suzuki has the expertise to make small cars, Volkswagen does not. The German company has the expertise in environment friendly technology and has invested large sums. Combining the two will reduce cost of making new cars.
Volkswagen, which has a stronger dealership network in Europe compared to Suzuki, could source small cars from India and sell them under its own brand name,'' R C Bhargava, chairman of Maruti Suzuki, told newspersons in New Delhi.
Bhargava added that there was scope for cooperation between the two in diesel engine technology. ''Suzuki only has diesel engines of up to 1.3 litres, for which it has a tie-up with Fiat. But Volkswagen has the technology for diesel engines above 1.3 litres, which could be shared with Suzuki.'' He also did not rule out the possibility of the two collaborating in emerging markets other than India.
Maruti Suzuki has a similar outsourcing deal with Nissan to produce 50,000 of its popular A-Star hatchback cars which Nissan sells as 'Pixo' in Europe. This deal will continue, Bhargava said.