Suzuki to end tie-up with VW over Fiat spat | autos | Hindustan Times
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Suzuki to end tie-up with VW over Fiat spat

autos Updated: Sep 12, 2011 21:37 IST

Suzuki Motor wants to end its two-year-old alliance with Volkswagen after the German carmaker accused it of violating their partnership pact by agreeing a diesel engine deal with Italy's Fiat.

An exit by Suzuki would end an alliance forged in December 2009 that was billed as a partnership of equals to bolster VW's presence in India for small cars and give Suzuki access to hybrid and diesel technology it could not afford to develop on its own.

Suzuki chairman and CEO Osamu Suzuki offered to buy Volkswagen's 19.9% stake in his company with cash on hand, and in return, promised to offload its 1.5% stake in Volkswagen back to its estranged German partner.

Volkswagen agreed to pay around €1.7 billion ($2.3 billion) for the stake as part of a strategic partnership with the maker of the Jimmy and Grand Vitara. The stake is now worth around $2.2 billion, while Suzuki's Volkswagen stake is worth about $950 million.

"We don't have any projects in the works from the alliance," the Suzuki chairman said at a press briefing in Tokyo.

In a separate statement, Volkswagen said it had no intention of selling the shares and asked that cooperation between the two continue.

Suzuki's divorce filing comes after Volkswagen said on Sunday a deal by the Japanese company to source diesel engines from Fiat hurt cooperation.

VW was annoyed that Suzuki stuck with long-time engine partner Fiat late in June when picking it to supply its Hungarian-built SX4 crossover with a 1.6-litre diesel engine.

Suzuki has been buying 2.0-litre diesel engines from Fiat Powertrain Technologies since 2006 for the SX4.