Fault lines in VW-Suzuki alliance
From a promising start, the nearly two years old alliance between Volkswagen and Suzuki appears to be on shaky groundThe mutual-sharing deal between Volkswagen and Suzuki appears on the brink of collapse as both companies express frustration at the way things have – or haven't - worked so far in the almost two-years-old alliance.
Forming the multi-billion dollar partnership in 2009, Volkswagen acquired 19.9 per cent of Suzuki, while the Japanese company took just 2.5 per cent of Volkswagen in an understanding that would see both companies sharing and benefiting from each others' expertise. Underwriting all this was an understanding there would be respect for each other's autonomy.
But with Suzuki now concerned over what it sees as Volkswagen's wish for deeper involvement in the running of its operations and Volkswagen saying Suzuki is failing to reciprocate on the technological front, it appears both partners are questioning the future value of the relationship.
There have been no mutual project developments since the forming of the alliance.
Reuters reports say Volkswagen has made it clear it has no designs on Suzuki's decision-making processes. Its annual report to shareholders tends to contradict this, where it has apparently been stated the arrangement would enable it to wield influence over the Japanese company.
However according to a Reuters report, Volkswagen's Hans Demant, who is in charge of the alliance, says there are no plans to get involved with Suzuki management.
"Volkswagen and Suzuki are and will remain two independent companies. No increase of Volkswagen's Suzuki stake has been agreed upon," he said recently.
The agreement originally was seen as both a means for Volkswagen to produce vehicles using Suzuki facilities in South East Asia - where it currently has no manufacturing plants - and for Suzuki to harness Volkswagen engine expertise, especially diesels, for future models.
With Suzuki share prices dropping after an initial rise when the deal was struck, it has been reported the Japanese company is now agitating to have the agreement brought back to the drawing boards for reassessment.
Two years with nothing to show seems a long time, so it would seem reasonable that any reassessment should include some sort of timeline mapping out future joint projects.
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