Suzuki Decides To End Tie Up With Volkswagen

Published: Monday, September 12, 2011, 14:46 [IST]

Suzuki Motor Corp is planning to end its alliance with German car group Volkswagen soon according to reports from Japan. The two carmakers had joined hands in 2009 and made a deal according to which Volkswagen bought a 19.9 per cent stake in Suzuki and Suzuki bought a 1.5 per cent stake in VW.

The relationship between Volkswagen and Suzuki did not take off to expected levels. There were no joint projects even after two years of the deal. Suzuki chairman Osamu Suzuki in an interview had said there were no technologies with Volkswagen that had interested him.

Volkswagen was interested in Suzuki's small car building expertise and had offered access to its technology to Suzuki. Volkswagen was also interested in Suzuki's huge market share in India where its subsidiary Maruti Suzuki sells more than half the cars sold.

Suzuki was infuriated by a Volkswagen report that stated the German car group had influence on Suzuki's decisions. Suzuki insisted that it was independent and din not need to heed to VW's demands.

The relationship between Suzuki and Volkswagen deteriorated after the Japanese carmaker decided to buy diesel engines from Fiat for the cars it builds in Hungary. Volkswagen accused Suzuki of infringing the conditions of its alliance and had given Suzuki few weeks time to explain its decision. VW had also said it would not be selling its stake in Suzuki but would only want to discuss the issue further

This appears to have angered the Suzuki management. Suzuki has not provided an an official statement on the deal breaking down.