Suzuki denied talks with VW Group over partnership row

Article by Anita Panait, on August 1, 2013

Suzuki and Volkswagen Group have not resumed discussion on resolving a current row over a partnership deal, the Japanese carmaker said. Executive Vice President Toshihiro Suzuki remarked although there have been various reports on the talks, but no such discussions are happening. In 2011, Suzuki filed for international arbitration against Volkswagen after the German carmaker declined to sell back its 20 percent holdings in the Japanese company.

The German carmaker shelled out EUR1.7 billion ($2.3 billion) for the stake in January 2009 in an agreement that would have allowed VW to get a better traction in India, and Suzuki to gain access to fuel-saving technologies.

The partnership went from good to worse after VW said Suzuki had breached their contract by deciding to acquire diesel engines from Fiat. Suzuki is claiming that VW is withholding hybrid powertrain technology it vowed to share and is demanding that the German carmaker return the stake.

Media reports have stated that VW and Suzuki have resumed talks at the board level and are continuing to view the industrial logic for the partnership as compelling. Bloomberg reported on July 26, 2013 that VW Chairman Ferdinand Piech and Suzuki President Osamu Suzuki are both involved in the effort to strike a common ground over the partnership.

Suzuki logged a record JPY44.1 billion ($448 million) in operating profit for the quarter ended June 30, 2013, thanks to higher sales Indonesia and Thailand that allowed it to counter offset a slump in India. Indian subsidiary Maruti Suzuki posted a 10-percent drop in car sales in the country in the April-June 2013 period, no thanks to an economic slowdown as well as a decline in the popularity of diesel-powered units. Suzuki has raised its forecast for its full fiscal year operating profit to JPY165 billion. [source: Reuters]

Topics: suzuki, vw, partnership

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