Despite announcing an alliance at the end of 2009, Suzuki and Volkswagen appear to have fallen out, ending plans to get the tie-up working.
There have been several reports in recent months of a growing rift that, according to a Bloomberg News report this week, started over VW’s description of Suzuki Motor in its annual report.
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“Volkswagen is not talking to us,” Osamu Suzuki, the Japanese automaker’s chairman, said in an interview. “We have no plans to talk to them.”
VW had said in the March report that it could “significantly influence financial and operating policy decisions” at Suzuki, describing the Japanese company as an “associate.” That didn’t sit well with Suzuki, according to Bloomberg.
The partnership was meant to combine Suzuki’s leading position in India, Asia’s second-fastest growing major economy, with Volkswagen’s global reach as the world’s third biggest carmaker.
Announcing the deal last December, said they had agreed “to establish a close long-term strategic partnership”. The pair said each had complementary strengths and would work together where there would be benefits from doing so while retaining the independence of each company.
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By GlobalData“In terms of product [lines], global distribution and manufacturing capacities, Volkswagen and Suzuki ideally complement each other. The companies plan a joint approach to the growing worldwide demand for more environmentally friendly vehicles,” they said.
“The management of Volkswagen and Suzuki have concluded that the complementary strengths of each company make for a perfect fit in exploiting their respective advantages as well as rising to the challenge of the global market.”
“Both parties are focused on achieving synergies in the areas of rapidly growing emerging markets as well as in the development and manufacturing of innovative and environmentally friendly compact cars.
Volkswagen purchased 19.9% of Suzuki’s and Suzuki, in turn, invested up to half of the amount received from Volkswagen in VW shares.
Almost two years later, no joint projects have begun, however, Bloomberg said.
“Suzuki really needs a big manufacturer behind it, so the effect of a withdrawal would be far worse for them,” Aleksej Wunrau, a Frankfurt-based BHF Bank AG analyst told Bloomberg. “Volkswagen could very well step back from Suzuki and either seek another partner or start afresh on their own in Japan and India, which would of course be a lot more expensive.”
Suzuki has said he hasn’t found any VW technologies he’d like to adopt following an extensive review and, in June, decided to buy diesel engines from Fiat for cars built in Hungary. Suzuki in July also said the automaker was open to forming alliances with others, Bloomberg noted.
VW chief financial officer Hans Dieter Poetsch on a July 28 conference call said the partnership was under “review.”
“VW and Suzuki still are, and will continue to be, two independent companies with different business models from different cultural environments,” Hans Demant, VW’s coordinator for international projects, told Bloomberg in an e-mailed statement. “The cooperation is marked by highest respect and acceptance.”
A successful relationship depends on an understanding that the two are equal partners, according to two Suzuki executives, who declined to be publicly identified discussing the matter. The company is aiming to clarify what direction it wants to take with the partnership by October, one of the executives told Bloomberg.
