Suzuki Demands Volkswagen Withdraw Claim Of Breached Contract

Danny Choy
by Danny Choy

After a two year alliance between Volkswagen and Suzuki, relations and communication quickly deteriorated earlier this September after Suzuki had gone to Fiat to supply their engines. Volkswagen, upset at the deal, very publically claimed it was a serious breach of Suzuki’s contract.

Now, Suzuki Chairman and CEO, Mr. Osamu Suzuki, is demanding Volkswagen to withdraw the claim, as it stains Suzuki’s global reputation and public image. Osamu also insists that the deal with Fiat does not violate any contractual agreements with Volkswagen.

According to Suzuki, the matter of buying Fiat engines had been discussed with Volkswagen back in January and both sides accepted the terms. The reason behind the deal is Suzuki’s need of an engine that would meet specified parameters for their Sx4 compact. Fiat had such a 1.6 liter diesel engine available while Volkswagen did not.

The unraveling relations have accelerated as a very upset Osamu Suzuki says, “Volkswagen’s notice and press release hinder our effort to develop attractive new products and significantly disparage Suzuki’s honor. I think you can share my view why Suzuki would like to dissolve partnership and cross-shareholding relationship with Volkswagen.”

Volkswagen currently owns a 19.89 percent share of Suzuki while Suzuki holds 1.49 percent of VW. Initially expecting benefits from the alliance, Osamu is frustrated by two years of, “Ball and chain for our managerial independence.” Osamu intends for Suzuki to abandon its 1.49 percent holdings of VW and demands that VW sell all 19.89 percent of its stake in Suzuki as well.

While it is clear that Suzuki is stubbornly convinced their relationship with Volkswagen has come to an end, VW has no intention of selling their stake in Suzuki. Earlier this week, Volkswagen also announced their ambitions to grow into a larger automaker.

[Source: Automotive News]

Danny Choy
Danny Choy

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