Suzuki seeks to end tie-in with Volkswagen

SUZUKI Motor wants to end its two-year-old alliance with Volkswagen after the German carmaker accused it of violating their partnership pact by agreeing a diesel engine deal with Italy’s Fiat.

An exit by Suzuki would end an alliance forged in December 2009 that was billed as a partnership of equals to bolster VW’s presence in India for small cars and give Suzuki access to hybrid and diesel technology it could not afford to develop on its own.

But the partnership has been beset with problems and failed to deliver any meaningful progress for either company.

Suzuki chairman and chief executive Osamu Suzuki offered to buy Volkswagen’s 19.9 per cent stake in his company with cash in hand, and in return, promised to offload its 1.5 per cent stake in Volkswagen back to its estranged German partner.

Volkswagen agreed to pay around €1.7bn (£1.46bn) for the stake as part of a strategic partnership with the maker of the Jimmy and Grand Vitara. The stake is now worth around $2.2bn (£1.4bn), while Suzuki’s Volkswagen stake is worth about $950m.