Failed Suzuki-Volkswagen alliance comes to an end – VW must sell its remaining shares, court states

Volkswagen Jetta CKD 14

The on-going tussle between Suzuki and Volkswagen has finally come to an end, it would seem. After close to four years since the Japanese manufacturer filed for a divorce from Volkswagen, the International Court of Arbitration has stated that Volkswagen must now liquidate all of its remaining shares in Suzuki.

According to Automotive News, said decision was announced by Suzuki in a filing to the Tokyo Stock Exchange, only a day after the Japanese carmaker received the outcome. “It’s good that a resolution came. I feel refreshed. It’s like clearing a bone stuck in my throat,” said chairman, Osamu Suzuki (pictured below). “I’m very satisfied with the resolution. Through it, Suzuki was able to attain its biggest objective.”

“The Tribunal upheld Suzuki’s claim regarding VW’s disposal of its shares in Suzuki and ordered VW to divest forthwith those shares to Suzuki or a third party designated by Suzuki using a method which is reasonably determined by Suzuki,” added Osamu. As part of the ruling, Suzuki may compensate Volkswagen “for its breach of agreement” – of which the amount of damages will be determined in another stage of arbitration.

In a separate statement, Volkswagen stated that it acknowledged the ruling and will sell its remaining 19.9% stake in the Japanese brand. The German marque also said that it welcomed “the clarity created by this ruling” and that it “expects a positive impact on earnings and liquidity from the sale.”

Ozamu Suzuki

Said fiasco began in 2011 when Osamu publicly confronted the German brand, offering to buy back shares from Volkswagen in a desperate bid to end the failed marriage. The catalyst, of course, was identified in 2009 when Volkswagen bought a stake in Suzuki under the impression that it wanted to gain insight into how the carmaker became adept at manufacturing compact budget vehicles.

In exchange, Suzuki would gain access to Volkswagen’s vast portfolio of technological and drivetrain-related know-how as well as being able to leverage on the German carmaker’s additional manpower. The Japanese marque, famous for its stance on independence, then began to doubt the German’s sincerity when the latter claimed it needed to upsize its stake to 33% to “facilitate technology transfers.”

Suzuki’s suspicions were solidified when the German brand listed the former as an associate and proceeded to book the firm’s profits on its annual report. With the dust settled, the ruling now leaves Volkswagen without a partner on which to work with to develop low-cost compact cars for emerging markets – Suzuki, on the other hand, will now be listed as a potential partner for other manufacturers to collaborate with.

As far as the latter’s recent collaborations go, Suzuki Motor Corporation has recently signed a Memorandum of Understanding (MoU) and Licence Agreement with Proton Holdings Bhd and DRB-Hicom for the production of cars as well as a new model. In a twist to the history books, Volkswagen was due to enter a technical partnership with Proton via acquiring a stake several years ago – said plan has since collapsed.

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Gregory Sze

An “actor” by training, Gregory Sze realised that he has had enough of drama in his life. Following his number one passion (acting was actually number two), he decided to make the jump into the realm of automotive journalism. He appreciates the simple things in life – a simple car with nothing but back-to-basics mechanical engineering and minimal electronics on board.

 

Comments

  • Heng Lee on Sep 01, 2015 at 12:52 pm

    “As part of the ruling, Suzuki may compensate Volkswagen “for its breach of agreement” – of which the amount of damages will be determined in another stage of arbitration.”

    The International Court of Arbitration has stated that Suzuki MUST compensate VW for its breach of agreement.

    Hopefully Proton has good lawyers at hand, as Suzuki doesn’t seem to take agreements serious… ;)

    Like or Dislike: Thumb up 1 Thumb down 12
    • Jonn Dol on Sep 01, 2015 at 1:52 pm

      It’s VW who doesn’t honour the agreement seriously, trying to play cunning games..

      Like or Dislike: Thumb up 17 Thumb down 1
      • Baleno on Sep 01, 2015 at 7:56 pm

        VW is the one who followed the law by the book here. Suzuki seems to NOT understand the law or purposely flouted it. Dangerous precent for Proton now that it is going to bed with Suzuki.

        Like or Dislike: Thumb up 1 Thumb down 3
  • domainicus on Sep 01, 2015 at 12:55 pm

    Isn’t Proton the partner now?

    Like or Dislike: Thumb up 3 Thumb down 0
  • WaJib on Sep 01, 2015 at 2:19 pm

    Suzuki DIVORCED VW because of continued DSG failure which strained their marriage..

    Like or Dislike: Thumb up 6 Thumb down 7
    • learnbeforeyoucomment on Sep 01, 2015 at 8:04 pm

      Rubbish la Wajib. In Japan and Western Europe, the DSG is not even an issue. Besides, even with the DSG issue, VW is still the world’s largest car company now. If you followed the story from the beginning, you will notice that Suzuki was the one trying to take advantage of VW’s economies of scale. VW was interested in Suzuki only because it thought it didnt have to build a small platform and use Suzuki platform for small cars.You must understand Suzuki is totally relying on small platform for its survival, especially in India, its biggest market. In the case of VW, its mid sized platform is the reason it is the largest car company in the world today, even overtaking Toyota and GM for the very first time. So DSG is certainly not an issue on a global scale now or in the past.

      Like or Dislike: Thumb up 3 Thumb down 3
      • Dsg sucked on Sep 05, 2015 at 6:40 am

        Rubbish to the max, dsg failure not a problem in other country, most of the vw sold in euro were manual, go c how the failure dsg rate in China.

        Like or Dislike: Thumb up 1 Thumb down 0
  • seancorr (Member) on Sep 01, 2015 at 2:28 pm

    So failed partners with VW are now sleeping in bed together…hehehe.

    Like or Dislike: Thumb up 3 Thumb down 8
    • Laugh all u like, but once the VW behemoth cast its eye of Sauron on BMW, only a miracle can save it from becoming another dour shitbox.

      Like or Dislike: Thumb up 2 Thumb down 2
 

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