By on February 23, 2011

Ever since Volkswagen bought not quite 20 percent of Suzuki a little more than a year ago, industry observers said: “Now what?” To this day, the couple remains childless. Lately, there have been rumors that the impatient German side is pushing for offsprings, whereas the Japanese side stays chaste. Now finally, there might be results – if India’s Economic Times has the correct information.

India’s business daily says that “Maruti Suzuki will supply its latest compact car A-Star to Volkswagen AG . The car, which will undergo some modifications and design changes, will be sold in India and Asian markets under a new brand, according to senior officials in the automobile industry.”

Nothing is signed yet, but the Economic Times says that the agreement should be inked soon.

Maruti Suzuki sold the A-Star to Nissan, which re-badged the car as a Pixo for sales in Europe. That relationship became rocky shortly after the Suzuki-Volkswagen tie-up.

A little later, Suzuki said that all is hunky dory between Maruti Suzuki and Nissan. “Germany (Volkswagen) and Japan Suzuki are in talks,” Osamu Suzuki said last November. “Maruti Suzuki India has nothing to do with it.”

Now they do. According to the Economic Times, Maruti’s engineering team would work closely with VW to tweak the car to fit Volkswagen’s needs.

“There could be some changes in the basic design though the overall technical specs won’t be altered,” said the Economic Time’s informant.

Volkswagen needs a low cost small car for the developing markets. Wolfsburg engineers lost touch with the company’s entry-level roots. Their Lupo had been discontinued in 2005 and replaced with the Made in Brazil Fox. It’s not a big seller in Europe and it drinks too much. Having an entry level car is the key to long term success in developing markets. You won’t make a lot of money with that car, but you can forge lifetime relationships with customers who never had a car before.

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