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by Brett Davis

Suzuki has terminated its tumultuous partnership with Volkswagen that was initiated less than two years ago. Suzuki is demanding its 19.9 share back, but Volkswagen is refusing to sell.

It sounds a little bit like a soap opera. Suzuki announced on Friday that it terminated the deal – a deal that failed to come up with any specific joint project –  and is asking Volkswagen AG to sell back its 19.9 per cent share. The Japanese company is even threatening Volkswagen by mentioning international courts and arbitration.

Volkswagen has since rejected Suzuki’s requests, saying that Suzuki’s reason pulling out of the partnership lacks ‘foundation’. Volkswagen said in a statement,

“We are extremely disappointed that Suzuki has taken this step. There is no legal foundation whatsoever obliging us to surrender our shares. Volkswagen will continue to hold its stake.”

Ever since the two companies paired up in 2009 there hasn’t really been a moment showcasing traditional teamwork. As part of the contract, Suzuki was meant to be given access to Volkswagen’s technology, while Volkswagen was meant to be given access to Suzuki’s Indian market connections. None of this ever saw the light of day.

In 2010, Volkswagen published in its annual report that Suzuki was an ‘associate’, downplaying the partnership. Suzuki was later accused of violating the contract terms by making deals with Fiat in regards to acquiring engines. Suzuki has also been accused of failing to provide Volkswagen access to the Indian market.

Suzuki chairman Osamu Suzuki expressed on Friday the company was aiming to go its own way in the future, terminating the partnership.

“I am disappointed that we have to take this action but VW’s actions have left us no choice. They have continued to refuse our attempts on numerous occasions to resolve these issues through negotiation. I am more disappointed that having shaken the hand of Dr Winterkorn [Volkswagen chairman] in agreeing to this partnership, he has not honoured his commitment to grant Suzuki access to what was originally agreed.”

“In the absence of VW’s cooperation and given its failure to do what was agreed, there is no basis for the partnership to continue. We will now work to restore the relationship between Suzuki and VW to its original state as independent parties who do not restrict each other.”

Suzuki says it will give Volkswagen “some time” before initiating court action. We’ll keep you updated.




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