Volkswagen AG and Suzuki Motor Corp will waste no time in their new alliance, beginning work on joint projects after the new year holidays around January 10.

Just a week after signing the deal to give VW a 19.9 percent share of Suzuki, the CEO of Japan’s fourth-largest manufacturer, Osamu Suzuki, said there was an agreement between the brands to produce a competitively priced small car for developing countries.

“We generally understand what we want from each other, through information exchange up to now.

“Actual, detailed execution – with our people going there and their people coming here – will be after January,” he said.

Earlier speculation that Suzuki’s Indian branch Maruti was directly involved in talks with VW to make car priced below $6000 was flatly denied by the CEO.

“Suzuki Motor has authority over this, not Maruti.”

Maruti Chairman, RC Bhargava, later clarified his remarks:

“What I have said is, one of the possibilities is that Volkswagen could outsource a small car from us,” he told Reuters.

The announcements came at the Japanese launch of the seventh-generation Alto.

Increased interior space, an upgraded continuously variable transmission and fuel efficiency gains of 15 percent (down to 4.1 litres/100km) head the changes.

Since its launch in 1979 more than 10 million Altos have been sold, mostly in Japan and India, and the CEO is confident the minicar’s success will continue.

“I think we will add another 10 million units at a faster pace,” Suzuki said.

The 660cc car is a different vehicle to the global Alto sold in here and Suzuki Australia’s Andrew Ellis confirmed that it is not on the local agenda.

“We’ll never see the Japanese version, it’s just way too small,” he said.

Ellis said the launch of the Alto this year was a highlight for the company in a difficult market.

“It was a tough year, no two ways about it.  But given all that, we’re down around four percent against a market that’s down nine percent, so we’ve done pretty well.

“I think Australia was well positioned so we took advantage of that.

“The government’s 50 percent bonus incentive – that was a good decision.  It will be interesting to see what happens with commercial sales net year with that no longer there.”

But on the whole he expects the market in 2010 to be more favourable.

“Early indicators are that it’s coming back.

“I think a slight increase on the numbers we did this year. This year was a consolidating year, so I would be confident of an increase again next year,” he said.

Figures will be helped by mechanical and safety upgrades to the SX4 in February and the arrival of the Kizashi in May, something that Ellis is personally very excited about.

“I saw it at Frankfurt over two years ago and I’ve been waiting for it ever since.”

He said it was still too early to talk about pricing, but confirmed that it will be pitched against the Mazda6 and Honda Accord Euro in the medium/large sedan segment.

(with Automotive News)