Volkswagen's biggest attempt to get an effective hold on the Indian market was when it purchased an astounding 19.9 per cent stake in Suzuki Company at a price of $2.3 billion in December 2009. The bold move by the car maker gave rise to strong speculations that Europe's number one automobile company is making a desperate attempt to grab a large share in the Indian auto market. As a matter of fact, India along with China, for quite some time now, have been recognised as the fastest and biggest-potential markets compared to other regions of the world.
The 19.9 per cent control over Suzuki enabled Volkswagen to successfully carve a niche in the Chinese market. However, it gave a lukewarm performance in India and the speculations about Volkswagen and Suzuki parting ways would add to the problem. A noticeable share in Suzuki Company could have resulted in oblique control over Maruti, which is a topmost subsidiary and holds the title of the highest passenger car manufacturer of the country.
On the other hand, Suzuki too expected to gain advantage from Volkswagen's diesel engine and green technology which comes with hybrids and electric vehicles. In this case however, the benefits seemed to incline more towards the German car maker, which was eyeing to cash in on the exceptional ability of Suzuki in making small cars. This in turn, would have been useful for Volkswagen, seeing the global market's great penchant for compact vehicles.
In case Volkswagen and Suzuki decide to call off the alliance, the Indian market too will face dire consequences. As of now, Volkswagen has to wait for the right time and then start off with operations in order to make it big in India. Skoda, Seat, Bentley and Audi, all have been produced by Volkswagen, and the addition of Suzuki would have been a huge driving force in making it the world's biggest car maker by 2018.
While Volkswagen is currently functioning independently in India, the company's understanding of the dynamics would be a gradual process, owing to lack of assistance from the leader Suzuki. If things would have turned out the other way, the two companies would also have enabled an upper hand over suppliers. In addition, Volkswagen could have used Maruti's highly cost-efficient component vendors to its advantage.
For Maruti, the dissociation would mean more efforts being put in to boost exports. It could have turned Volkswagen's clout in Europe into its advantage.
Thus, the final destination seems to be far for Volkswagen, however its plans and policies amidst tough times have always aided the company in getting through untoward situations.
