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VW and Suzuki End Angry Feud

Arbitration ends failed green car alliance.

by on Aug.31, 2015

Suzuki pulled out of the US with the failure of its midsize model, the Kizashi.

An arbitration tribunal has pulled the plug on a once-promising green car alliance between Volkswagen AG and Suzuki Motor Corp. The German maker has now been ordered to sell back the 19.9% stake it had purchased in the Japanese car company.

But VW says that may yet sue Suzuki for damages as a result of the break-up of the alliance which was formed in 2009 but never got off the ground, instead developing into a bitter public dispute between the two companies.

Global News!

“It used to feel as if a small bone were stuck in my throat,” Suzuki Chairman and Chief Executive Osamu Suzuki told a news conference after learning of the decision. “I feel so refreshed now.”

The two manufacturers entered the partnership six years ago with a goal of producing both hybrid and electric vehicles. But they could not agree on details of the project and Suzuki moved to end the venture two years later, demanding VW sell back the stock it had purchased for $1.9 billion. That stock currently is worth around $3.8 billion.

Suzuki shares gained even more ground after the announcement of the tribunal’s decision, but it could yet be held liable for damages if Volkswagen decides to take additional action. The arbitrators ruled that the Japanese maker did breach the terms of the 2009 agreement.

“We have already retained an investment bank and will in the next few days consult with the bank and our lawyers over the next steps to be taken,” noted a statement from VW.

(10 automakers sued over allegedly deadly keyless ignition problems. Click Here for details.)

The original intention of the goal was to develop an array of battery-based small vehicles. At the time, VW was lagging behind the industry in terms of green technology. It has since made a major push on its own, launching a variety of hybrids, plug-ins and pure battery-electric models, including a BEV versions of its Golf line.

The venture also was intended to press into emerging markets such as India.

Suzuki has long dominated that promising nation’s auto sector and its global line-up largely focuses on smaller vehicles.

The Japanese maker said it decided to end the alliance because it felt VW was demanding too much control. In turn, VW criticized Suzuki for buying diesel engines from Fiat, rather from the German maker.

(VW’s bid for global sales crown hurt by downturn in China. Click Here to find out why.)

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