PICK a likely partnership between two automotive giants and it's unlikely Volkswagen and Suzuki would emerge as suitors.

But that's what will happen next month if authorities approve.

VW and Suzuki have reached a common understanding to establish a comprehensive partnership.

Volkswagen will buy 19.9 per cent of Suzuki's issued shares and Suzuki intends to invest up to one half of the amount it receives from Volkswagen into Volkswagen shares.

The plan is to form a joint approach to meet the growing demand for smaller cars with high fuel efficiency and lower CO2 output.

Also this month, Volkswagen took a 49.9 per cent stake in Porsche.