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  • It’s not you, it’s Suzuki… how a motor marriage with Volkswagen reached break-up point

    September 12, 2011 @ 7:44 pm | by Laura Slattery

    Corporate alliances, if the soured partnership between Suzuki and Volkswagen is anything to go by, are just like human relationships – complex, tortured and rife with passive-aggressive barbs that can be helpfully delivered by third parties (in this case, the media).

    Suzuki chairman Osamu Suzuki certainly feels that way: “We should just have a simple break up with a smile and say we weren’t meant for each other,” he said today of his company’s marriage to VW.

    The Japanese vehicle manufacturer and the German carmaker’s partnership agreement first frosted over back in March, when VW made the rash claim in its annual report that it had the power to “significantly influence financial and operating policy decisions” at Suzuki, which it described as an “associate”. This didn’t go down well with Suzuki, which had, seemingly, not yet committed to quite such an intimate and controlling a relationship.

    Not long afterwards, Suzuki took up with a familiar acquaintance, Fiat, deciding to buy diesel engines from the Italian carmaker, with which it had previously done some business. In August, the Suzuki chairman said the company “sees no reason why Volkswagen would be upset” by its purchase of engines from Fiat.

    But VW took Suzuki’s flirtation with its old flame personally. Message received, it said in July that it was placing the partnership “under review”. Suzuki executives responded by noting to news wire Bloomberg that a successful relationship depends on an understanding that the two companies are equal partners. In other words, it wanted some R-E-S-P-E-C-T. It was also heard smarting that VW “keeps talking to the media, but not to us directly”.

    VW is now insisting that the Japanese firm violated the terms of their partnership. Bravely, it gave Suzuki an ultimatum - granting it “several weeks” to remedy the alleged infringement, or else. Suzuki has replied by saying if that’s how VW feels about it, then maybe VW should sell the 20 per cent stake it holds in Suzuki.

    Suzuki chairman Osamu Suzuki at a news conference in Tokyo, September 12th. Photo: Reuters / Kim Kyung-Hoon

    It’s probably too late for both parties to sit down and consider what brought them together in the first place. The VW-Suzuki partnership was always going to be a marriage of opposites. Suzuki’s dowry was its leading position in India, while VW’s attractions lay in its global reach as the third’s biggest carmaker. United, they were supposed to take the hybrid and electric car markets by storm. But that was 2009. Two years later, and no joint projects have begun.

    It’s entirely possible that VW and Suzuki may yet turn out to be the motor industry’s equivalent of one of those couples who fight constantly, only to confound divorce-forecasting sceptics by renewing their vows instead. But right now, it seems the early flush of excitement has worn off, permanently. The two companies are discovering that they have little in common and probably never really did.


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