Associated Press is reporting today that Volkswagen AG will buy a 20 percent stake in Suzuki Motor Corp. for $2.5 billion, forming one of the world's biggest auto alliances and giving the two carmakers a boost in fast-growing Asian markets.

Suzuki, which makes small cars such as the Swift and the Splash, said Wednesday it will also purchase shares in Volkswagen worth up to half the amount the German maker buys, solidifying the partnership through cross-holding of equity, according to the AP report.

The Japanese automaker said the companies plan to complete the deal, which would make Volkswagen its top shareholder, by mid-February.

The two companies said their combined global sales surpassed 8.6 million cars last year, exceeding the 7.5 million sold around the world by the Toyota Motor Corp., the world's no. 1 automaker.

The alliance will encompass product development, production and sales and focus on hybrid and electric cars, Suzuki said.

"The world automotive industry is in the midst of significant changes," Suzuki said in a statement. "It is difficult to adapt to these numerous issues on our own."

"We must move with the times," Suzuki Chairman and Chief Executive Osamu Suzuki said in a joint news conference with his new partner.