[ampere]

Saw this news piece today. More silence from either parties.

Tiff stops VW-Suzuki alliance progress

[FourWheelDrift]

Oh boy ... the only ones who can be happy with this situation, no matter what the outcome, are the lawyers ... and the competition.

Source : Volkswagen And Suzuki: Shots Fired | The Truth About Cars

In the long simmering conflict between Suzuki and Volkswagen, the gloves are coming off and we are having a bit of domestic violence. Volkswagen just said in an emailed statement:

“The review of the partnership with Suzuki Motor Corp announced by Volkswagen Aktiengesellschaft has brought its first results. Volkswagen stated in Wolfsburg on Sunday that the company is serving notice of an infringement by Suzuki of the cooperation agreement concluded in December 2009.
The notice concerning the infringement relates to the supply of diesel engines produced by another manufacturer to Suzuki. Volkswagen takes the view that this contradicts the terms of the cooperation agreement. Suzuki has now been given a period of several weeks to remedy the infringement. Volkswagen considers this step regrettable, but necessary, and has offered to discuss the matter with Suzuki. At the same time, the company stresses it still regards Suzuki as an attractive investment.”

At this point (11:48 in the evening in Tokyo and a Sunday in Wolfsburg) it is unclear what the “notice of infringement” will trigger. It depends on how the contract is written. Typically, these contracts stipulate that the party that has been notified is given a chance to rectify the infringement. In this case, it would mean that Volkswagen expects from Suzuki that it at the very least cancels the diesel engine deal with Fiat. An even more welcome step would be that Suzuki places an order with Volkswagen. Both seem to be unlikely.

If Suzuki doesn’t rectify the alleged infringement, then Volkswagen can hold Suzuki in breach of the contract. What happens thereafter again depends on the language of the contract. Typically, an act like this signals the impending end of the alliance. These notices usually serve to establish “cause” that allows an unilateral termination of the contract.

I’d read the claim that Volkswagen “still regards Suzuki as an attractive investment” not as a peace offer, more like a statement that bolsters future damage claims. Volkswagen ominously says that this may not be all:

“This review has not yet been finalized.”

[antz.bin]

SOURCE: Volkswagen accuses Suzuki of violating supply contract | Firstpost

German carmaker Volkswagen said Japanese partner Suzuki had violated their near two-year old partnership and gave it weeks time to fix the situation, marking a new low in relations between the two.

VW said on Sunday a deal by Suzuki to source diesel engines from Italian group Fiat was a contractual breach.

“Suzuki has now been given a period of several weeks to remedy the infringement. Volkswagen considers this step regrettable, but necessary, and has offered to discuss the matter with Suzuki,” it said.

A VW spokeswoman said this “does not mean the end of the partnership” and it was still very much interested in continuing the alliance. “We will have to see now how Suzuki reacts and then we will discuss the next steps to be taken.”

VW did not intend to either sell or reduce its 19.9 percent stake in Suzuki it bought in December 2009 for 1.7 billion euros ($2.3 billion) as part of a strategic partnership with the maker of the Jimmy and Grand Vitara, the spokeswoman said.

Reuters

Suzuki stuck with long-time engine partner Fiat late in June when picking it to supply its Hungarian-built SX4 crossover with a 1.6 litre diesel engine.

Suzuki has been buying 2.0-litre diesel engines from Fiat Powertrain Technologies since 2006 for the SX4, manufactured in Esztergom together with the Fiat Sedici, which shares the same underpinnings.

VW CLAIMS INFLUENCE

Billed as a partnership of equals, VW hoped its Suzuki deal would address, in one fell swoop, its two biggest weaknesses—gaining a foothold in India and in the market for cars with a maximum 1 litre engine.

In return, Suzuki would receive access to technology it could not afford to develop on its own.

A year and a half later, the partners have no joint projects and relations have headed south. Suzuki executives saying there was a “need to return to the starting point, including the ownership ratio”.

Suzuki chief executive Osamu Suzuki first signalled his unhappiness over the deal in a July 1 blog in Japan’s leading business daily, Nikkei.

Later, Suzuki was angry VW had classified it as an associate to be carried at equity—an accounting term typically reserved for holdings of at least 20 percent where VW can “significantly influence financial and operating policy decisions”.

“It is there, in written form, and it is being explained this way to their shareholders. This came as a complete shock, and we struggle to see how they are influencing us in any way,” executive vice president Yasuhito Harayama, in charge of relations with VW, told reporters in July.

Reuters

[AdityaLN]

Suzuki wants continue to be a independent producer and wants VW's assistance for engine technology. VW want's Suzuki as a subsidiary to achieve it's goal of becoming the largest passenger car manufacturer.

Excerpt from the article. Suzuki was angry VW had classified it as an associate to be carried at equity -- an accounting term typically reserved for holdings of at least 20 percent where VW can "significantly influence financial and operating policy decisions."

"It is there, in written form, and it is being explained this way to their shareholders. This came as a complete shock, and we struggle to see how they are influencing us in any way," Executive Vice president Yasuhito Harayama, in charge of relations with VW, told reporters in July.

[pacman2881]

Suzuki to offer to end its alliance with Volkswagen: Nikkei
TOKYO: Suzuki Motor Corp plans to offer to end its capital and business alliance with Volkswagen, according to media reports.
Volkswagen holds a 19.9 percent stake in Suzuki, while Suzuki holds a 1.5 percent stake in Volkswagen. The two have been locked in skirmishes that have been threatening their alliance.
A Suzuki spokesman declined to comment on the report.

Source- Suzuki to offer to end its alliance with Volkswagen: Nikkei - The Economic Times

[rameshnanda]

More news coming in on Suzuki-VW alliance.

Suzuki seeks divorce from Volkswagen over Fiat spat - The Economic Times

[.sushilkumar]

I guess Suzuki is on loose ground here. If V W took their actions to heart , they may mount a hostile takeover bid on Suzuki corp( although not a easy task ). I see this whole episode as more of a individual Ego clash rather any anything else.

One thing is clear , VW is hell bend on imposing itself on Suzuki and Suzuki is hell bend on maintaining it;s arrangement with FIAT. In Nutshell, FIAT is responsible for all the heart burn between two partners .

Edit : - saw this news in economic times. What does it means now as Suzuki has already announced that they will sell their 1.5 % stake in VW.

http://economictimes.indiatimes.com/...ow/9955662.cms

FRANKFURT: German auto giant Volkswagen said on Monday that it had no plans to end its cooperation with Japanese partner Suzuki, even though Suzuki has decided to pull out of the two-year-old alliance.

"We're still interested" in a cooperation with Suzuki, a VW spokesman said in response to an announcement by the Japanese car maker that it was severing ties with Europe's biggest car maker.

"We stand by what we've always said, and what we said again yesterday," the spokesman told AFP, pointing to a company statement in which it insisted that Suzuki "remains an attractive investment."

The two car makers entered into a strategic alliance in December 2009, with VW buying a 19.9-percent stake in Suzuki and the Japanese group buying 1.5 percent of its German partner with the aim of pooling their respective strengths in hybrid and small-car technologies.

However the 1.7-billion-euro ($2.3-billion) alliance turned sour, with Suzuki claiming its autonomy was under threat and that VW was treating it as its own subsidiary.

VW announced at the weekend that it was serving notice of an infringement by Suzuki of their cooperation agreement.

"The notice concerning the infringement relates to the supply of diesel engines produced by another manufacturer to Suzuki. Volkswagen takes the view that this contradicts the terms of the cooperation agreement," the German maker said in a statement.

"Suzuki has now been given a period of several weeks to remedy the infringement. Volkswagen considers this step regrettable, but necessary, and has offered to discuss the matter with Suzuki."

[srishiva]

Is 1.5% of VW equivalent to 19.9% of Suzuki?
Even before the engine spat, Suzuki had been trying to maintain its independence.

[.sushilkumar]

Originally Posted by srishiva

Is 1.5% of VW equivalent to 19.9% of Suzuki?
Even before the engine spat, Suzuki had been trying to maintain its independence.

VW paid 2.5 billion USD to buy this 19.9 % stake in Suzuki ,where as Suzuki spend 1.13 billion of that amount to buy 2.5 % stake back in VW.

looks like it;s over now as Suzuki has officially asked V W to Cut their ties. IMO sad , for what was once a most promising partnership for Indian customer.

source :- Reuter

VW buys $2.5 billion Suzuki stake | Reuters

[anjan_c2007]

Another link with the news of the partnership now killed by Suzuki ! Volkswagen says its still interested and is not willing to sell the Suzuki shares.Suzuki insisted on buying diesels from a third party viz. Fiat and was cautioned and given a deadline by Volkswagen acting as a Big Brother. But Suzuki felt its autonomy was being interfered with. The Ritz, Swift, DZire and the SX4 are being branded as the causative factors!
Its much like being with your old lover, even after your marriage.The VW and Suzuki managements must see the love triangle Bollywood flicks and learn how to still survive and flourish, even with the old lover making merry with the spouse.
More details on this link:
Suzuki kills partnership with Volkswagen - The Local

[deetjohn]

I don't know all the details of the issue here. Hormazd Sorabjee says the main challenge is technical incompatibility like the engine layout difference in Suzuki and VW.

Both use a transverse engine layout but traditionally, the VW exhaust manifold is towards the front of the car and the Suzuki one towards the rear (towards the firewall). So, there are technical challenges towards sharing an engine as it is not a straight fit. Suzuki will need major rework to rotate the VW oil burner 180 degree under the hood.

I don't know how far this is true but if this means Suzuki will continue with brilliant MJD instead of the VW 3 pots in our country, I am all for this breakup.

[fiat_tarun]

We tend to keep looking only at the Indian side of the Suzuki - VW / Fiat deals. India is a big market but i feel, other than India, globally Suzuki actually has a lot to learn from VW, especially now hybrids gaining popularity in Europe / US. VW's DSG tech (although it has relaibility issues) is an awesome technology and maybe Suzuki could have got their hands on that ??

Anyway, the Japs don't like being told what to do and even if VW is interested in going ahead, Suzuki has made it very clear that they want to exit.

Me thinks Fiat should grab this opportunity and partner with Suzuki for the Asian markets, but with the Tata JV on, this seems highly unlikely.
Anyway

[volkman10]

Gap widens between Suzuki and VW!

Volkswagen scraps plans of sharing platform with Maruti Suzuki's A-Star; to drive in UP! next year - The Economic Times

[souravc]

Originally Posted by fiat_tarun

Me thinks Fiat should grab this opportunity and partner with Suzuki for the Asian markets, but with the Tata JV on, this seems highly unlikely.
Anyway

The problem is that Fiat has spent more than a billion to buy Chrysler which would give them a great foothold in US - I would think their hands would be too full for them to seriously bother about anywhere else, including India, for the next 3-4 years at least . All said and done Suzuki should realise where its batting on a weak wicket vis-a-vis much larger players such as Hyundai , VW, Ford , Toyota and GM

[fiat_tarun]

Originally Posted by fiat_tarun

Me thinks Fiat should grab this opportunity and partner with Suzuki for the Asian markets, but with the Tata JV on, this seems highly unlikely.
Anyway

Originally Posted by souravc

The problem is that Fiat has spent more than a billion to buy Chrysler which would give them a great foothold in US - I would think their hands would be too full for them to seriously bother about anywhere else, including India, for the next 3-4 years at least . All said and done Suzuki should realise where its batting on a weak wicket vis-a-vis much larger players such as Hyundai , VW, Ford , Toyota and GM

Marchionne is giving us some hope !

http://in.reuters.com/article/2011/0...59311020110913

Fiat Chief Executive Sergio Marchionne said on Tuesday Suzuki would be an interesting partner for the Asian market.
Suzuki Motor wants to end its two-year-old alliance with Volkswagen after the German carmaker accused it of violating their partnership pact by agreeing a diesel engine deal with Fiat...