Volkswagen forced to divorce Suzuki

Volkswagen and Suzuki have ended their agreement for the joint development of cars and expansion of presence in emerging markets.

In December 2009, Volkswagen and Suzuki had entered into an agreement which would see the two companies jointly developing eco‐friendly budget cars and expanding their presence in India and other emerging markets. Volkswagen purchased a 19.9% in Suzuki and the Japanese company purchased approximately 1.5% of the ordinary shares in Volkswagen.

According to a ruling by an arbitral tribunal in London, Suzuki breached its contractual obligations to Volkswagen under the agreement. However, it also found that Suzuki terminated the agreement upon reasonable notice. The German company will now have to dispose of the 19.9% stake that it holds in Suzuki. The tribunal has ruled that Volkswagen has a right to claim damages as well.

Suzuki broke off an ongoing cooperation project at the end of 2010 and failed to give Volkswagen last‐call rights for the delivery of diesel engines.

In November 2011, Suzuki initiated arbitration proceedings in London. The tribunal rejected Suzuki’s claims of breach of contract.