Vw to end partnership with Suzuki due to firm’s intentions to buy Fiat engines

Article by Christian Andrei, on September 12, 2011

Volkswagen AG said that Suzuki Motor Corp.’s move to buy engines from Fiat broke the rules cited in their contract agreement. In a statement, VW said that it has given Suzuki several weeks to “remedy the infringement.” While VW considers this as a “regrettable” move, it is necessary. VW told Suzuki that it is willing to discuss the issue.

The conflict between the two automakers started in March when VW referred to Suzuki as an “associate” in its annual report.

VW had also said in this report that it could “significantly influence financial and operating policy decisions" at Suzuki. Last June, Suzuki announced its decision to purchase diesel motors from Fiat for cars assembled in Hungary.

A VW spokeswoman told Reuters that the company remains interested in the alliance and so this step doesn’t mean that the partnership has ended. She said that VW will wait for Suzuki’s reaction before it will talk about the next steps that it might take.

The chairman of Suzuki, Osamu Suzuki, told Bloomberg earlier this month that there have been no communication between the two automakers. Because of this disagreement, no operational alliance from a 222.5 billion-yen ($2.9 billion) investment was realized.

VW and Suzuki’s partnership was designed to merge Suzuki's leading position in India (which is the second-fastest growing major economy in Asia) with Volkswagen's global reach as third-biggest automaker in the world.

Topics: vw, suzuki, partnership

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