Blog: Dave LeggettSuzuki sidelined

Dave Leggett | 30 April 2012

I guess the corporate amalgamation that was DaimlerChrysler is a good example of an auto industry coming together that ultimately failed. On paper there was a rationale that made some sense. In practice, it just didn't work out. The two partners didn't share much in the end. The less they shared, the less they felt they needed to share. The synergies never materialised in the ways they should have and shareholder value gradually evaporated. One partner (Chrysler) felt aggrieved that it wasn't on an equal footing with the other and the other (Mercedes-Benz) arguably developed something of a superiority complex.

The Renault Nissan Alliance however, has worked well. The key there, perhaps, is that the relationship is an alliance, not a takeover or merger. Areas of cooperation – notably parts procurement and platform sharing – are well defined, corporate independence protected under limited cross shareholdings and politically comfortable board make-ups.

Volkswagen and Suzuki were going to have an alliance, but the smaller firm got the distinct impression that the bigger one was eyeing control and an eventual takeover. An acrimonious parting of the ways is still not over. Volkswagen has a small but significant stake in Suzuki and is not prepared to hand it back; lawyers are involved and the case could rumble on for a while. And while VW retains that stake, Suzuki is effectively ruled out of the automotive partners game.

I wouldn't mind betting that Sergio Marchionne has looked at the post-VW Suzuki and wondered whether Suzuki might be a good Asian fit to Fiat-Chrysler's alliance. Suzuki had clearly recognised that it could do with a partner to help in some areas, but it also wanted to retain its independence. Marchionne might well be in a position to deliver some reassurance on that. Fiat has been very careful in its relationship with troubled Chrysler.

Alas, Ferdinand Piech has, for now, picked up the Suzuki ball and run off with it.

GOLDING’S TAKE: Three in Fiat's bed better than two?


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