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Can grow without Suzuki in India, says VW

As many as 89 new cars or concepts would be premiered at the 64th edition of the Frankfurt Motor Show, but it is the strain in the relations between Europe’s number one car maker Volkswagen and Japan’s Suzuki Motor Corp that is hogging the limelight. Sumant Banerji reports.

autos Updated: Sep 13, 2011 21:00 IST
Sumant Banerji

As many as 89 new cars or concepts would be premiered at the 64th edition of the Frankfurt Motor Show, but it is the strain in the relations between Europe’s number one car maker Volkswagen and Japan’s Suzuki Motor Corp that is hogging the limelight.

A day ahead of the show, the German car maker somewhat softened its stand on the alleged infringement of agreement by the Japanese company but insisted that though Suzuki was important it can grow without it in India as well.

“We stand by our commitment when we invested in Suzuki,” said Martin Winterkorn, CEO, Volkswagen group. “We remain one of the largest shareholders in Suzuki. For India, it was a good option but we can grow on our own too....We have done it (grown) so far.”

VW showcased a near production ready version of the Up concept, a car smaller than the Polo, a stripped down 5- door version of which could make its way into India.

Suzuki’s subsidiary Maruti Suzuki India Ltd is the largest carmaker in India.

Only two days ago, VW had criticised Suzuki for expanding its diesel technology tie-up with Fiat, calling it an infringement. The company had offered Suzuki time to remedy it but the Japanese company in turn offered to end the partnership altogether and buy back the shares that VW held.

"We have asked for a divorce," said Osamu Suzuki, chairman, Suzuki Motor Corp. "There is no longer any purpose to VW's shareholding."

"We take note of it," was all Winterkorn said on Suzuki's offer to buy back the shares.

The two firms started a partnership back in December 2009, when Volkswagen picked up a 19.9% stake in Suzuki while the latter has a 1.5% stake in VW. The two companies were expected to share synergies

with the Japanese firm lending a hand in emerging markets such as India while VW would bolster Suzuki in areas like hybrid technology that needs huge investments to develop.

That partnership however has not yielded anything tangible yet and Suzuki's increasing proximity to Italian carmaker Fiat, which supplies diesel engines for cars like Swift, Ritz and SX4 has become a bone of contention between the two.

(The writer’s travel & stay was sponsored by Skoda Auto India.)