Volkswagen denies reports that it will quit alliance with Suzuki

Article by Christian Andrei, on August 5, 2011

Volkswagen AG and Suzuki Motor Corp. deny that they are terminating their alliance. German newsletter Platow Brief had reported earlier that the two automakers are ending their partnership but according to VW spokesman Michael Brendel, the report is "nonsense." A Suzuki spokesman has also come out to say that there’s no truth to the report.

On July 28, Chief Financial Officer Hans Dieter Poetsch said that VW is reviewing its partnership with Suzuki as their cooperation has been developing more slowly than anticipated.

In January 2010, VW purchased a 19.9% stake in Suzuki for 222.5 billion yen ($2.86 billion) as part its expansion plans in India and other growing markets.

On July 18, Executive Vice President Yasuhito Harayama said that Suzuki is questioning its relationship with VW as the Japanese automaker assesses the overall basis for cooperation with the German firm instead of new projects or cars. Initially, Volkswagen sought to develop hybrids and electric vehicles with Suzuki under both car brands.

Suzuki controls Maruti Suzuki India Ltd., which builds half of all cars that are sold in India, boosting VW’s presence in the Asian market as it aims to become the world's biggest automaker by 2018.

Last month, Harayama asserted Suzuki’s independence, saying that the two companies have to return to the drawing board on their alliance. Volkswagen reacted with a statement that it won’t be encroaching on Suzuki's autonomy. Poetsch said the strategic cooperation was not being executed with the expected level of intensity.

Topics: vw, suzuki, partnership

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