Volkswagen and Suzuki continue to play the blame game

Tuesday 27 September 2011, 15:40 PM by

There seems to be no end to the war of words which further escalates the problems that have cropped up between Volkswagen AG and Suzuki Motor Corp. in the recent times. Volkswagen continues to hold its stance, wherein, it accused Suzuki Company of breaching a partnership agreement by purchasing engines from Fiat S.P.A.

Volkswagen further intensified the situation by adding that the Japanese company's complaints that its honour has been breached were "theatrical."

The German auto maker reiterated that Suzuki needs to "correct" an alleged contract violation which was caused following its purchase of diesel engines from Fiat.

Volkswagen and Suzuki continue to play the blame game   |
Volkswagen and Suzuki continue to play the blame game

Suzuki Chairman and CEO Osamu Suzuki vehemently refused to accept any allegation levied on it, by saying that his company did not breach the partnership agreement. He further added that the allegation had "significantly disparaged Suzuki's honour.” Osamu has asked the German auto maker to take back its words publicly by Sept. 30, which claimed that Suzuki violated the tie-up agreement by striking a deal for diesel engines with Fiat. According to the Chairman and CEO of Suzuki, the demand was stated “since Suzuki’s global reputation has been significantly damaged by the announcement.” He communicated that a letter for the same has being written to Volkswagen CEO Martin Winterkorn.

Volkswagen, while confirming that the letter was received, said, "Such theatrical actions are unhelpful in the current situation." The company went further by saying; it was unable to understand that how does obeying the rules and regulations of a contract and exercising the rights defined under the same, be termed as defamatory. "From Volkswagen's perspective, every effort has been made from the start to continue the partnership," the German car company was quoted as saying.

Osamu Suzuki, on Sept. 13, expressed its wish to "divorce" the German car maker in order to end the 20-month-old car-making alliance, after Volkswagen's $2.9 billion investment failed to undertake a single project.

The loopholes of their relationship were exposed in the public when the German carmaker, which owns 19.9 per cent of Suzuki, said that it is quite possible for the car maker to influence decisions being made in the Suzuki Company.

Suzuki, which has a stake of 1.49 per cent in Volkswagen, mulls upon selling-off its holdings in case the tie-up ends, the company said in a Sept. 12 statement to the Tokyo Stock Exchange. On the other hand, Volkswagen confirmed that it has no plans to sell or reduce its stake in Suzuki. The adamant attitude adopted by the two auto makers clearly indicate that the possibility of undertaking any efforts, which would bring forth a solution, is quite less.

Daniel Schwarz, a Frankfurt-based analyst at Commerzbank AG said, "I can't conceive how this conflict can possibly be resolved. The chances are growing now that the partnership accord will be dissolved."

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