Japan’s Suzuki Motors has offered to terminate its alliance with German automaker, Volkswagen (VW).
The Nikkei daily says the Japanese automaker came up with the offer at an extraordinary general meeting Monday, after VW accused its Japanese ally of a partnership breach.
Volkswagen says a separate deal by Suzuki to use Fiat engines is a breach of their partnership, and had given the Japanese automaker “several weeks” to address the problem.
Suzuki earlier denied violating the agreement.
When Suzuki and VW signed the agreement in late 2009, the Japanese automaker was eyeing Volkswagen’s engine technology, while the German automaker was keen on Suzuki’s access to India.
Suzuki has a successful partnership with Maruti in India, where they are market leaders.
But no deals have materialized since, and Suzuki has been unhappy with the nature of the partnership with Volkswagen.
In one incident in July, VW classified Suzuki as “an associate to be carried at equity.”
This implies holdings of at least 20%, and where VW can significantly influence financial and operating policy decisions.
Suzuki disputes any form of VW influence.
The German carmaker paid $2.3 billion for a 19.9% stake in Suzuki. It says it has no intention of selling the stake, and wants to continue with the alliance.
Suzuki shares pared losses after falling as much as 3.7% in Tokyo.
Bottom line: Suzuki and Volkswagen’s fragile relationship takes another knock, with VW accusing its Japanese ally of a partnership breach; media says Suzuki offers to end alliance.