Monday, 18 July 2011

Suzuki unhappy with VW stance in partnership

Suzuki Motor Corp formed an alliance with Volkswagen in late 2009 as equal partners and takes issue with the German automaker's claim that it can wield influence over the Japanese company's management, a top executive said on Monday. 

"It was made very clear when we tied up with Volkswagen that we did not want to become consolidated, and that we would remain independent," said Executive Vice President Yasuhito Harayama, who is in charge of Suzuki's relations with Volkswagen.  He added that there were other automakers who were willing to work with Suzuki on an equal footing, and that Suzuki would continue to pursue operational tie-ups with a broad range of companies while holding back on any projects with Volkswagen until the two can reaffirm their initial understanding. 

"Right now, there is no specific joint development project going on with Volkswagen," Harayama told reporters in a group interview with Suzuki's four new executive vice presidents. 

Harayama's comments indicate a major step back for the Volkswagen-Suzuki partnership, which had been cheered by financial markets when it was formed in December 2009.  The tie-up had been expected to give Volkswagen an inside track into Suzuki's leading small-car technology, while Suzuki would have access to Volkswagen's hybrid and other next-generation technologies that it could not afford to develop on its own.  Suzuki Chief Executive Osamu Suzuki had insisted then on being equal partners, limiting Volkswagen's stake to 19.9 percent and saying it would pay the equivalent value to buy the German automaker's shares.  Harayama's remarks echoed the views expressed by Suzuki in a recent blog, published on the Nikkei newspaper's online site. Volkswagen's claim that it could "have great influence over the management of Suzuki" was made in its annual report to shareholders, Harayama said. 

"The two companies' sizes differ vastly in size, so maybe with the passage of time they get the misguided notion that they have brought Suzuki under the VW umbrella," CEO Suzuki wrote in the blog, published on July 1.  Suzuki also said in the blog that having perused Volkswagen's technologies, the automaker "found nothing that it wanted right away". In a back-handed compliment, Suzuki goes on to say he was "relieved" that Volkswagen had reportedly made progress in developing a low-cost car without Suzuki's help for South America and India. 

Last month, Suzuki announced a deal to buy 1.6-litre diesel engines from Italy's Fiat for a car to be built in Hungary -- a deal that both Suzuki and Harayama said proved the automaker could do without Volkswagen.


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