Volkswagen, Suzuki head for messy divorce | autos | Hindustan Times
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Volkswagen, Suzuki head for messy divorce

Suzuki Motor Corp accused Volkswagen of withholding hybrid technology it had promised to share, triggering an exchange of legal threats in the increasingly acrimonious spat over their two-year-old alliance.

autos Updated: Oct 14, 2011 21:38 IST

Suzuki Motor Corp accused Volkswagen of withholding hybrid technology it had promised to share, triggering an exchange of legal threats in the increasingly acrimonious spat over their two-year-old alliance.

Japan’s Suzuki has served VW with a notice of breach of contract, demanding the German company give it access to key technologies within weeks. Unless it does so, Suzuki’s biggest shareholder must sell back its stake and quit the alliance, it said on Friday.

VW replied that it had provided “intensive technical support” for developing efficient engines including hybrid technology and that it was looking into its legal options.

The latest exchange of accusations deepens a feud between the two car makers. Last month, VW accused the Japanese firm of breaching their agreement by procuring diesel engines from Fiat and is demanding it end that cooperation.

“The whole point of the partnership was to gain access to key technologies, such as those for hybrids and environment technologies,” executive vice-president Yasuhito Harayama said at a conference in Tokyo. “If VW can’t honour that, it must return Suzuki’s shares immediately.’

The German car maker insisted in a statement it had always honoured its agreements with the Japanese partner. “We keep our options open, including legal options,” it added.

VW bought a 19.9% interest in Suzuki for about €1.7 billion ($2.3 billion) in January 2009. At Thursday’s closing price that stake was worth $2.4 billion.

Suzuki, which said it has yet to hear a proper response from VW about a proposal for a divorce, may consider other steps if VW ignores the notice, Harayama said.

Last month, Suzuki chairman and CEO Osamu Suzuki offered to buy those shares cash on hand, and in return, promised to offload its 1.5% stake, worth $1 billion, in Volkswagen back to its estranged German partner.

The tie-up was meant to bolster VW’s presence in India for small cars and give Suzuki access to technology it could not afford to develop on its own but the partnership has so far failed to deliver any meaningful cooperation.