Volkswagen AG confirmed on Wednesday that it was buying a 19.9 stake in the Japanese carmaker Suzuki.

The Japanese carmaker issued a statement that Volkswagen would pay some 222.5 billion yen ($2.5 billion) for the stake.

Suzuki plans to use up to half the funds it receives from VW to buy shares in the German carmaker - a move that is to balance the scales.

"Both companies will establish a cooperative relationship while respecting each other's independence as a stand-alone entity," the statement ran.

The automakers said they hoped to create a long-term strategic partnership, especially in the development of small and environmentally-friendly cars.

"In terms of product portfolio, global distribution and manufacturing capacities, Volkswagen and Suzuki ideally complement each other," the statement added.

The partnership would give Suzuki, which specializes in small cars, access to VW technology, while the German automaker is set to strengthen its position on Asian markets, especially in India and South-East Asia.

The transaction, which still requires regulatory approval, is to be concluded in January.

VW has only just bought 49.9 percent of the German luxury sports car maker Porsche. The Wolfsburg-based company is planning to complete the takeover by 2011, making Porsche its 10th brand.

The head of VW's supervisory board, Ferdinand Piech, said in September that VW would eventually strive for ownership of 12 brands.

nk/dpa/AP/Reuters/AFP

Editor: Trinity Hartman