The Nikkei has just published a report in regards to the brewing Suzuki/Volkswagen feud, stating that the Japanese brand will offer to terminate its capital and business deals with the German auto giant.

A statement by Suzuki that was sent to the Tokyo Stock Exchange revealed that the decision was made during an unscheduled board meeting today. This comes after Volkswagen claimed on Sunday that Suzuki has breached its partnership with Volkswagen by engaging Fiat to supply diesel engines to Suzuki.

Autonews also reported that Suzuki will ask Volkswagen to sell the 19.9% stake it has in Suzuki. At the same time Suzuki also plans to sell its 1.49% stake in Volkswagen, if it agrees to the arrangement.

This issue has somewhat affected Volkswagen’s plans of forming a strong alliance with Suzuki. The marriage was supposed to combine Suzuki’s dominance in India with Volkswagen’s global reach. A forecasting done by IHS Automotive indicate that Suzuki, or Maruti Suzuki as it is known in India will sell 36% of the total 3.07 million vehicles delivered in the country in 2011.

A technology collaboration was also planned in the hybrid and EV segments but to date, no solid outcome has been announced. Chairman Osamu Suzuki mentioned in a newspaper column in July that he has not found any Volkswagen technologies that he would like to carry over into Suzuki.

He also went on to say that he is open with forming alliances with others and mentioned in an interview on August 10th that he does not see a reason why Volkswagen would be upset in regards to the Fiat deal. Last month, two Suzuki executives also said that “a successful relationship depends on an understanding that the two are equal partners”.

Suzuki also said that the partnership has become non-beneficial for the company’s management freedom. It was in fact stated in Volkswagen’s annual report in March that the company can “significantly influence financial and operating policy decisions” in Suzuki.

Despite all this, Volkswagen said on Sunday that it still considers Suzuki as an attractive investment and has given the company several weeks to remedy the infringement. The company’s CEO Martin Winterkorn revealed in May that his company planned to target the small car segment in India as part of a potential joint project with Suzuki, apart from parts procurement and the alternative-drive technology development.

Suzuki is expected to make an official announcement over the matter soon.