Suzuki Automotive Vice President, Yasuhito Harayama, said this week in London that the agreement between Volkswagen and Suzuki has officially been terminated, and “…thus Volkswagen does not have the legitimacy to keep hold of any Suzuki shares”. The matter is now in arbitration in a London court, with hearings expected to be heard at the beginning of 2013. Suzuki Automotive’s Vice President says he is confident of a positive outcome.
The initial agreement was first signed between the two volume car makers back in 2009, when Volkswagen bought US$2.1 billion worth of shares from Suzuki. The partnership was meant to benefit Volkswagen by allowing access to Suzuki’s strength in the Indian sub-continent, as well as its expertise with sub 1 000 cc cars. Suzuki soon became livid over the fact that Volkswagen did not share enough technical information with them, as was the stipulation of the stock sale. Suzuki is now taking Volkswagen to court in an attempt to force them to return the 19.9% of Suzuki stock they own.
Suzuki has reportedly offered to buy the shares back at the current market rate, which analysts say is more than generous and would guarantee Volkswagen a sizeable profit per share. Volkswagen however, seems unwilling to relinquish their shares saying that Suzuki broke the partnership by turning to Volkswagen’s European rival, Fiat, for new engine technology. We look forward to the outcome of arbitration. It’s been clear for a while that this partnership has been going nowhere slowly since 2010.