Partnership Between Volkswagen And Suzuki Goes Sour

Partnership Between Volkswagen And Suzuki Goes Sour

In 2009, Volkswagen, in its ever growing quest to become the largest automaker in the world, bought 20% of Suzuki for $2.5-billion. The partnership would have given VW insight into Suzuki’s small-car technology, a segment the Japanese auto-maker is very successful at in Japan. Suzuki on the other hand would have gained valuable knowledge on hybrid technology. It looked like a win-win for both sides, but things have been far from ideal between these two companies.

However, according to Suzuki’s Executive Vice-President Yasuhito Harayama, no progress has been made. In a statement, Harayama said, “It was made very clear when we tied up with Volkswagen that we did not want to become consolidated, and that we would remain independent.”

Harayama, who was previously a bureaucrat for Japans economy and trade ministry was hired by Suzuki two years ago. He went on to say, “We feel we need to return to the starting point, including over the ownership ratio. The understanding that we are independent companies, and equal partners, is the absolute prerequisite in pursuing any specific cooperation.”

He feels that VW was just looking to take control over Suzuki, and that it was not any kind of partnership. As part of their cross-shareholding partnership, Suzuki has also been buying shares in VW.

Hans Demant, the man in charge of the alliance between VW and Suzuki is trying to calm the storm between these two companies. He said, “Volkswagen and Suzuki are and will remain two independent companies. No increase of Volkswagen’s Suzuki stake has been agreed upon.”

VW also said that they would not encroach on Suzuki’s autonomy. In a back-handed remark, Osamu Suzuki, the CEO of this Japanese brand congratulated VW on developing a low cost car for India and South America, without Suzuki’s help.

Suzuki last month signed a deal with Fiat, to purchase their 1.6-liter diesel engines, for a car to be built in Hungary. Both Suzuki and Harayama said this proves that Suzuki does not need the help of VW to expand and move forward.

[Source: Reuters, The Economic Times]