Vw-Suzuki planned alliance may end before it is completed

Article by Christian Andrei, on September 8, 2011

The planned alliance of Volkswagen AG and Suzuki Motor Corp. may just end before it is completed. The argument started in March when VW stated in its annual report that it could "significantly influence financial and operating policy decisions" at Suzuki, which it described as an “associate.”

That did not sit well with Suzuki. Since then, the two companies have been arguing back and forth, prompting VW to stop its efforts to invest 222.5 billion yen or $2.9 billion into an operational alliance.

The partnership was supposed to merge Volkswagen's international scope as the third largest vehicle manufacturer in the world and Suzuki's prominent position in India, which is the second fastest emerging major economy in Asia, says Autonews.

In December 2009, the alliance was formed with VW owning 20 percent of Suzuki.

The partners announced that they aimed to cooperate on technology related to electric and hybrid vehicles. They also aimed to enter emerging markets.

However, no joint projects were created in two years after the alliance was made. VW is targeting to outperform General Motors Co. and Toyota Motor Corp. as the largest vehicle manufacturer in the world by 2018.

It also aims to expand its market to India in order to increase sales. After selling 7.2 million units in 2010, VW estimated that deliveries will increase 5 percent this year.

Meanwhile, Suzuki sold 2.64 million units in its last fiscal year, 1.13 million of which were in India. On the other hand, VW sold 53,300 units in 2010 in the country.

Topics: vw, suzuki, partnership

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