Volkswagen intends to continue with VW-Suzuki JV

The Japanese auto maker Suzuki Motors has threatened Volkswagen to provide access to the diesel technology in tandem with the original agreement, which was formed two years ago. This is in response to the Volkswagen’s allegation against the Japanese manufacturer for violating the contract by making use of Fiat’s diesel technology. Suzuki Motors have demanded Volkswagen to break the contract by selling out the Suzuki’s stake from the Volkswagen-Suzuki alliance.

Suzuki’s presence in the global market is infinitesimal in comparison with the Volkswagen’s global presence with numerous subsidiaries in different parts of the world. The Japanese auto major has the advantage of its established presence in India with 50% market share along with country’s leading car manufacturer Maruti India. While Suzuki is quite content borrowing the Fiat’s diesel engine technology, Volkswagen AG seems to continue with the partnership without yielding to sell out 20% Suzuki stakes. Apparently, Hans Demant, a key executive from Volkswagen, who handles the Volkswagen-Suzuki JV, had ruled out any possibility of selling out Suzuki’s stakes and maintained that both the auto giants can benefit from the complementary technologies in the country through the partnership. He had also added that the situation can be worked out with some effort from both the parties.

The JV between Suzuki Motors and Volkswagen AG came into effect in 2009 with the manufacturers’ intention to mutually benefit from each other’s technology. While Suzuki hoped to benefit from the Volkswagen’s hybrid and diesel engine technology, Volkswagen envisaged gaining access to Suzuki’s small car development technology in India. Suzuki Motors might not be able to develop the hybrid technology without an external help due to lack of resources. On the other hand, Suzuki has other probable alliances in the pipeline with Porsche and another truck manufacturing deal with MAN and Sweden’s Scania. Suzuki Motors is maintaining a successful partnerships with Fiat for the diesel engine supply and Nissan for developing small cars.

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