The drama continues with Volkswagen and Suzuki’s rocky marriage – Suzuki has sent a letter to Volkswagen demanding that the German company retract its claim that Suzuki violated their tie-up agreement by purchasing diesel engines from Fiat.

According to Suzuki, their global reputation has been significantly damaged by the announcement, and denies that the diesel engine purchase from Fiat Powertrain Technologies violated the agreement. Suzuki claims they consulted Volkswagen about buying the Fiat diesel engines in January, and both parties came to an agreement at that time.

Furthermore, it is claimed that Suzuki only turned to Fiat after engines offered by Volkswagen failed to meet Suzuki’s specs.

The following is an excerpt from a press release issued by Suzuki this week detailing their side of the story of what happened:

Last year, both companies negotiated for several months regarding the conditions for Suzuki’s use of certain engines manufactured by Volkswagen AG, however, Suzuki’s requirements were never satisfied.

In January of this year, when Mr. Osamu Suzuki conferred with Dr. Winterkorn in Hamamatsu, Suzuki delivered its message that Suzuki would not be using Volkswagen diesel engines together with background reasons.

In response to such explanation, Dr. Winterkorn requested Suzuki to issue a written notification if Suzuki decided not to use diesel engines manufactured by Volkswagen AG. Within a couple days of such request, we formally notified Volkswagen AG of such decision in writing. Immediately after issuing such notice, engineers from both companies who are responsible for this matter also mutually confirmed with each other that Suzuki will not use diesel engines manufactured by Volkswagen AG.

Volkswagen AG has requested Suzuki in the mentioned notice to implement a process to compare the diesel engines manufactured by Volkswagen AG and by Fiat as a remedial action. We believe it is clearly unreasonable for Volkswagen AG to claim on 11 September that Suzuki is in breach of the Framework Agreement based on presumption that this process is deficient, after a considerable amount of time has passed since Suzuki and Volkswagen AG mutually confirmed that Suzuki would not be using such engine.

In addition to the above, we have fully expressed our views in the rebuttal letter which we have sent today and have included references to the factual background of this matter including negotiations that occurred before the execution of the agreement which established the alliance on 9 December 2009, and detailed quotations from letters exchanged between the two companies.