Suzuki to end capital alliance with Volkswagen

Suzuki Motor Corporation on Monday said it will seek to end a 20-month old alliance with German automaker Volkswagen AG, as the tie-up has yielded no results. Suzuki, a 1.49 percent stakeholder in Volkswagen, plans to sell its holdings and dissolve the partnership providing Volkswagen agrees to end the tie-up inked in December 2009, the Japanese automaker said in a statement Monday to the Tokyo Stock Exchange. Volkswagen owns 19.9 percent of Suzuki, but the 2.9 billion U.S. dollar investment failed to produce a single project and a rift in the partnership began to widen after Volkswagen described its Japanese partner as an "associate" in its annual report. The repot went on to say that Volkswagen could significantly influence their Japanese counterpart's "financial and operating policy decisions." Suzuki executives subsequently claimed the report was high-handed and that the partnership was not on a level playing field. But while Volkswagen has said it has no plans of selling or lowering its stake in Suzuki, the Japanese maker known for its minivans and vehicles has breached the contract inked nearly two years ago by deciding to purchase engines from Italian automaker Fiat SpA, threatening to make the break from the German auto giant a tricky one. The alliance between the two firms has sunk so low recently that Osamu Suzuki, Suzuki's chairman, told local media that executives from the two firms are "no longer on speaking terms." On the Japanese side, it is believed that the tie-up could now have a negative impact on the company's "independent managerial decision-making," according to Monday's post-board meeting statement. The alliance was initially supposed to benefit both parties, with Suzuki receiving eco-technology from Volkswagen for hybrid and electric cars and in return providing Volkswagen with its small-car expertise, which has seen the firm take the No. 1 spot in India, Asia's second-fastest growing major economy. Osamu Suzuki said in the Nikkei newspaper recently that he hasn't found a single Volkswagen-based technology he'd like to adopt, having extensively researched the firm's capabilities and offerings.