“They are not talking to us, so we have no plans to talk to them”: it could be a high-school argument between two opposing teams, but in this case it involves Volkswagen and Suzuki, and the words came out of the mouth of the Japanese company’s chairman, Osamu Suzuki’s, according to a report from Bloomberg news.
It all began in March when a VW report said that it “could significantly influence financial and operating policy decisions” at Suzuki, which it described as an “associate”.
From that point on, the proposed alliance that was signed off in December 2009 and involved combining Suzuki’s leading position in Asia’s second-fastest growing economy, India, with VW’s global capacity as the world’s third biggest manufacturer, was shaky at best.
Initially, the Germans acquired a 20% stake at Suzuki and the two carmakers announced their intention to cooperate on hybrids and electric cars as well as ways of expanding in emerging markets.
Despite the much bigger size of the VW Group, in 2010 Suzuki sold 1.13 million cars, or about half of its total production, in India, while VW managed to shift only a paltry 53,300 units in comparison. But two years have passed, and no joint operation has even begun.
Analysts like Aleksej Wunrau of BHF Bank AG think that Suzuki has much more to lose if the alliance unravels: “Suzuki really needs a big manufacturer behind it, so the effect of a VW withdrawal would be far worse for them. VW could very well step back and either seek another partner or start on their own in Japan and India –something that of course would be a lot more expensive.”
The plot thickens when you add the Osamu Suzuki’s column in Nikkei newspaper last July, in which he claimed that, after an extensive review, he hadn’t found any VW technologies he’d like his company to adopt. And this came just one month after the Japanese automaker decided to buy diesel engines from Fiat for its cars built in its Hungary plant.
VW knew nothing about the Fiat deal before it was announced, and Mr. Suzuki’s comments that he was open to any cooperation proposals left the Germans even more frustrated. As a result, VW’s Chief Financial Officer, Dieter Poetsch, said on July 28 that the partnership between the two companies “is under review.”
So is this marriage going to end before the bride and groom consummate it? Executives on both sides deny any plans for terminating the alliance. VW’s spokesman Michael Brendel said that such reports “is nonsense” and one of Suzuki’s executives, who wishes to remain anonymous, also said that his company’s intention is to salvage the deal.
Story source: Bloomberg
