Volkswagen significantly disparaged firm’s honor, says Suzuki

Article by Christian Andrei, on September 23, 2011

Volkswagen AG isn’t budging from its claim that Suzuki Motor Corp. violated their partnership deal by purchasing engines from rival company Fiat S.p.A. The company was responding to the demand of Suzuki on Thursday that VW retract its accusation. Osamu Suzuki, chairman of the Japanese automaker, asserted that his company did not breach the partnership agreement and that the accusation had "significantly disparaged Suzuki's honor."

He disclosed that it had sent an official demand letter to VW CEO Martin Winterkorn. In response, VW contested that it failed to comprehend how sticking to contractually defined rights can be defamatory.

Also, VW stated that in its perspective, every effort has been made to continue the partnership, according to Autonews. Moreover, VW argued that the complaints of Suzuki saying that its honor has been breached were "theatrical."

VW repeated that the Japanese automaker has to "correct" an alleged contract violation stemming from its diesel engines purchase from Fiat.

On September 13, Osamu Suzuki stated that it wants a "divorce" to end the 20-month-old vehicle development alliance after VW's $2.9 billion investment failed to yield a single project. The relationship turned into a public feud after VW, which owns 19.9 percent of Suzuki, stated that it could influence decisions at the Japanese manufacturer.

Suzuki, which holds 1.49 percent of VW, intends to sell its shares if the alliance ends, the company stated in a Sept. 12 statement to the Tokyo Stock Exchange. On the other hand, VW stated that it has no plan to sell or reduce its holdings in Suzuki. According to industry watchers, the situation of the two automakers means that they are less likely to resolve their differences.

Topics: vw, suzuki, partnership

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