February 24, 2021

Suzuki Seeks to End Volkswagen Partnership

Volkswagen said, though, that it had no intention of selling its shares in Suzuki, expressing hope that it could salvage the partnership through talks.

“There are no projects at all under way,” Osamu Suzuki, the chairman of Suzuki, said at a news conference in Tokyo, comparing the situation to “getting a divorce.”

The Volkswagen-Suzuki partnership, forged in December 2009, had been billed as a mutually beneficial deal and part of a global effort by the German company to become the world’s biggest automaker.

Volkswagen, which spent 222 billion yen ($2.9 billion) on the deal, had hoped to tap Suzuki’s dominance in India, a market that is fast becoming one of the world’s largest. Suzuki was to gain access to hybrid and diesel technology from Volkswagen that it might not have been able to develop on its own.

But the alliance stalled even before getting under way. In a column in the Nikkei business daily in July, Mr. Suzuki said that he had not found any technologies at Volkswagen that his company wished to adopt. Subsequently, he said that Suzuki might be open to forming alliances with other companies.

Later that month, the chief financial officer of Volkswagen, Hans Dieter Pötsch, told investors that the partnership was under review because it was developing more slowly than expected.

On Sunday, Volkswagen said it was serving notice to Suzuki that the Japanese automaker’s decision to buy diesel engines from another supplier would be considered an infringement of their 2009 agreement. The German company said it was giving Suzuki several weeks to remedy the infringement.

The notice did not identify the supplier. Suzuki, however, recently decided to buy engines from the Italian automaker Fiat. Suzuki denied that it had broken its agreement with Volkswagen.

In a statement to the Tokyo Stock Exchange Monday, Suzuki said that it also planned to sell its 1.49 percent stake in Volkswagen if the German automaker agreed to end the tie-up. The Suzuki board had decided at an unscheduled meeting earlier in the day that the alliance was hindering management, rather than helping it, the statement said.

“Volkswagen underestimated the risks with Suzuki,” said Ferdinand Dudenhöffer, director of the Center Automotive Research at the University of Duisburg-Essen, in Germany.

Volkswagen acknowledged problems with the alliance but said it wanted to continue working with Suzuki.

“We are interested to continue the partnership and have no plans to sell our Suzuki stake,” Michael Brendel, a Volkswagen spokesman, said Monday.

“Volkswagen considers this step regrettable, but necessary and has offered to discuss the matter with Suzuki,” Volkswagen said in a statement. “At the same time, the company stresses it still regards Suzuki as an attractive investment.”

The failing partnership between Suzuki and Volkswagen would not be the first debacle involving Japanese and German automakers.

In the early 2000s, Daimler bought a stake of almost 40 percent in Mitsubishi Motors, but offloaded its holdings in 2005 after a scandal involving defects dragged the Japanese carmaker into record losses.

Renault of France has had better luck with Nissan Motor. Its 1999 alliance with the Japanese automaker is now in its 12th year.

Volkswagen, the world’s third-largest automaker after Toyota and General Motors, based on annual sales figures for last year, forecasts that global vehicle sales will rise 5 percent this year from the 7.2 million units it sold in 2010. The company has said it aims to become the world’s largest carmaker by 2012.

Suzuki sold 2.64 million cars in the 12 months ending in March 2011, almost half of those vehicles in India, where its sturdy compact cars dominate.

It previously had a longstanding alliance with General Motors, which ended as the Detroit automaker’s financial situation deteriorated.

Hiroko Tabuchi reported from Tokyo and Jack Ewing from Frankfurt.

Article source: http://feeds.nytimes.com/click.phdo?i=879a1ccb5f14a6577c7e2dbe7c9b3d58

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