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Suzuki ends pact with VW

business Updated: Nov 19, 2011 00:39 IST

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Suzuki Motor Corporation (SMC) on Friday said it has terminated the partnership pact with Volkswagen AG (VW) after two years of unsuccessful attempts to gain access to technology from the German firm.

SMC also said it will seek return of its shares from the German auto conglomerate through arbitration.

In 2009, SMC and VW had signed a deal under which the German firm picked up 19.9% stake in the Japanese car maker for $2.5 billion. It included technology sharing agreement.

“Today, Suzuki terminated the partnership with VW. Suzuki will be seeking the return of its shares from VW in arbitration. I am disappointed that we have to take this action but VW’s actions have left us no choice,” said Osamu Suzuki, chairman and CEO, SMC.

Comments from VW could not be immediately obtained.

SMC alleged that VW did not allow it access to its core technology despite their agreement.

“It also became clear that there were differences between Suzuki and Volkswagen in the understanding of ‘independence’. Suzuki cannot therefore establish a relationship of mutual trust which is the basis for collaboration between the two parties,” Suzuki said.

Accusing VW chairman Martin Winterkorn of reneging on his promise, Suzuki said: “I am more disappointed that having shaken the hand of Winterkorn in agreeing to this partnership, he has not honoured his commitment to grant Suzuki access to what was originally agreed.”

In the absence of VW’s cooperation and given its failure to do what was agreed, there is no basis for the partnership to continue, he said.

“With the cessation of the partnership there is also no basis for VW to hold on to Suzuki's shares. We will now work to restore the relationship between Suzuki and VW to its original state as independent parties who do not restrict each other's business,” Suzuki said.

“Unless Volkswagen AG effectuates the disposition of Suzuki shares to Suzuki or its designated third party immediately, Suzuki will begin arbitration, in order to re-establish the genuine independence of Suzuki by compelling the disposition of Suzuki shares to Suzuki or its designated third party,” SMC said.