Volkswagen is planning on becoming the world leader in automobiles by 2018 and it’s alliance with Japan’s Suzuki Motor was just another step to bolster its presence in India’s small car market making way for its 2018 goal. However the ongoing differences between Volkswagen and Suzuki for the last couple of months have had its impact on the partnership and on the 18th of November, Suzuki officially announced that it had terminated its two-year-old alliance with Volkswagen because the German czar did not honor its commitments towards Suzuki.
The two companies have been at odds since Volkswagen described Suzuki as an “associate” in its 2010 annual report, published in March. Relations took a turn for the worse after Chairman Osamu Suzuki accused Volkswagen of disparaging the Hamamatsu, Japan- based company’s honor by alleging it had violated the 2009 contract by buying engines from Fiat SpA.
Osamu Suzuki, Chairman and CEO, Suzuki Motor Company said, “Today, Suzuki terminated the partnership with Volkswagen. Suzuki will be seeking the return of its shares from VW in arbitration. I am disappointed that we have to take this action but Volkswagen’s actions have left us no choice.”
“We are extremely disappointed that Suzuki has taken this step to terminate the agreement. However, there is no legal foundation whatsoever obliging us to surrender our shares. Volkswagen will continue to hold its stake,” stated a Volkswagen spokesperson.