Suzuki and Volkswagen partnership may come to an end over Fiat engine deal

Suzuki and Volkswagen partnership may come to an end over Fiat engine dealThe 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.

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Harvinder Sidhu

Harvinder Singh Sidhu thinks there's nothing better than Formula 1, not even sliced bread. Having written about cars since 2006, he plunged head first into the industry out of a passion for all things four-wheeled and everything in between. The F1 enthusiast has been following the sport since 1999 and has been keeping up with it since. In between races he keeps himself busy as the host of the Driven motoring show and as our version of the Joker.

 

Comments

  • Suzuki is very confident. I pray for their best from bankruptcy.

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    • Verdict on Sep 12, 2011 at 9:56 pm

      Suzuki has right to be confident…

      See the new Suzuki Kizashi and Swift Sport design really impressive and get highly rating from USA cars review.

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  • suzuki best! 110cc..

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  • fahmi on Sep 12, 2011 at 8:56 pm

    After working for both japanese & german companies, I can attest to german ego and japanese stubbornness. it’s quite fascinating to see them go head to head.

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    • MoFaz on Sep 13, 2011 at 9:52 am

      have you tried malaysian companies? they have both ego and stubbornness.

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  • BeemerFreak on Sep 12, 2011 at 9:59 pm

    Suzuki should have just used VW’s tdi engines. Suzuki tried to be too smart by dealing with their own deals without the consent of its shareholders, this is agaisnt professional business code of ethics.

    They should just sell the stakes in Suzuki and try to conquer the market using their own products. They did it with China, so no reason not too with India, time is the only factor.

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    • tiadaid on Sep 13, 2011 at 8:37 am

      How do you know it’s not VW not coming up to their end of the bargain? Perhaps VW is being arrogant and withheld something back from Suzuki. The rumblings of discontent had been going on for some time already.

      Funny, nobody here stated “This could have been Proton”

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    • i wonder why Chairman Osamu Suzuki said that he has not found any Volkswagen technologies that he would like to carry over into Suzuki..

      those TDI, TSI engines and DSG gear box are great “technologies” product that can be carry over to Suzuki..

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  • ko malu saje... on Sep 13, 2011 at 12:37 am

    Not feeling great having a cheating spouse huh, Mr Volkswagen?

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  • riderxdesign on Sep 13, 2011 at 5:23 am

    and what if proton did venture with vw? lol :D

    i think suzuki should partner up with proton and fiat :). sharing CKD factory in india and 3 side could share a model or platform/engines.

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  • Leonardo on Sep 13, 2011 at 8:16 am

    I don’t think the German business culture will work outside Europe. History has shown from that the Diamler-Chrysler alliance, now the VW-Suzuki and even our own VW-P1 alliance won’t work. The Germans are very business like cut and dry, ‘yes’ and ‘no’ type. Asians takes into considerations friendship, tolerance, give and take, etc. VW always wants to play the dominant role.

    But agin, we will see if the Italian-Japanese alliance will work, since Italy also comes from Europe, but less rigid than the Germans in terms of business relationships. We should know in a few years from now.

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  • kayu3 on Sep 13, 2011 at 11:10 am

    no wonder. they should have freedom over their management.

    suzuki, way of life

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  • liverpool loser on Sep 13, 2011 at 11:46 am

    dont mess with sujuki la encik wagen…
    i respect ur beetle..tapi suzuki is best!
    idup suzuki panther!

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  • MOHA774 on Sep 13, 2011 at 1:07 pm

    …Proton is now open for strategic partnership…in my dream, but its not impossible…

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  • Volkswagen what’s wrong with you?just buy their whole company as ur group!

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  • Wisdom on Sep 13, 2011 at 2:17 pm

    VW with Proton…. no way
    VW with Suzuki…. no way
    Suzuki with proton… yes way?

    Proton longing for a model to fight with Myvi. Suzuki might have something on their shelves?

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  • LionelStep on Sep 13, 2011 at 11:08 pm

    Volkswagen would like a big stake of control over the quality system of the car production, which Suzuki might find quite difficult to accept. In the same manner that’s what they would like Proton to comply if they managed to forge the relationship. That’s the way how Volkswagen can ensure the quality and longevity of the good name of Volkswagen cars. But some other companies just can’t accept it….

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  • Pedro P. Coniconde on Sep 23, 2011 at 5:28 am

    Suzuki should have not separated from its long time alliance with General Motors despite of GM’s woes during the last two years. Subaru was a much smarter auto maker because after it separated from GM, It formed a mutual alliance with Toyota. Toyota now has a 19% stake and ownership of Subaru. If the Suzuki and Volkswagen marriage ends up in a nasty divorce, perhaps Suzuki should try to ally themselves with Toyota instead since neither is a competing threat towards one another and perhaps to get back on Volkswagen for mistreating Subaru just like a “battered” wife.

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