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Suzuki signals rift with Volkswagen over multi-billion-dollar partnership

By Motortrend India Staff   |   18 July,2011

Relations between Suzuki Motor Corp and Volkswagen AG’s have soured, with an executive at the Japanese automaker saying on Monday the two needed to go back to the drawing board on their multi-billion-dollar partnership.

Investors who expected Volkswagen to gain an inside track into Suzuki’s leading small-car technology, while Suzuki would have access to Volkswagen’s hybrid and other advanced technologies that it would not be able to afford on its own, welcomed VW’s purchase of a near-20 percent stake in Suzuki for $2.5 billion in December 2009.

More than 18 months on, however, no progress has been made, a fact Suzuki Executive Vice President Yasuhito Harayama blamed on Volkswagen’s notion it could wield influence over Suzuki’s management.

“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,” Executive Vice President Yasuhito Harayama, in charge of relations with Volkswagen, told reporters in an interview with Suzuki’s four new executive vice presidents on Monday.

“We feel we need to return to the starting point, including over the ownership ratio,” said Harayama, a former bureaucrat at Japan’s economy and trade ministry hired by Suzuki two years ago. “The understanding that we are independent companies, and equal partners, is the absolute prerequisite in pursuing any specific cooperation.”

Numerous reports since late last year have suggested Volkswagen was looking to bring Suzuki, Japan’s No.4 automaker, under its control. Harayama also said Volkswagen had classified Suzuki in its annual report as a company consolidated under the equity-accounted method over which it could have “great influence”.

Suzuki Chief Executive Osamu Suzuki had insisted at the time of the deal on being equal partners, limiting Volkswagen’s stake to 19.9 percent. Suzuki has been gradually buying shares in the German automaker as part of the cross-shareholding agreement.

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