Suzuki Motor Corporation (SMC) has announced its intent to dissolve its almost two-year-old partnership and cross-shareholding agreement with German automaker Volkswagen. The decision was made at a board meeting in Japan on Monday, even as Volkswagen officials reiterated they had no such intentions.
“Proposing a dissolution of our alliance means asking for a divorce,” Mr Osamu Suzuki, SMC Chairman, said at a press conference in Tokyo, according to agencies.
The move follows SMC's concern on securing its own “independence” in decision-making, after Volkswagen's Annual Report (2010) in March called SMC an “associate” where it “is able, directly or indirectly, to significantly influence financial and operating policy decisions”.
SMC also said it was finding it difficult to receive new vehicle technology — a major objective of the tie-up — and it is now accelerating its own efforts in the area. No major project has come out of the partnership so far.
“Suzuki's primary aim for the partnership was to receive technology transfer ….. (but) with Volkswagen AG's minor equity participation, it is difficult to receive technology transfer at the same or higher level as Volkswagen Group companies where Volkswagen AG has nearly 100 per cent of voting rights,” an SMC statement said.
It added, “There is concern that the partnership would have a negative impact on Suzuki's autonomous decision-making in its operating policy. Suzuki is going to request Volkswagen AG to dispose of Suzuki shares … if Volkswagen AG disposes of its Suzuki shares in line with Suzuki's intention, Suzuki also will dispose of its Volkswagen shares.”
Volkswagen said on Sunday it had served an “infringement” notice on SMC, alleging that the latter's recent deal with Fiat for supply of 1.6-litre diesel engines “contradicts the terms of the cooperation agreement” it has with SMC.
Mr R. C. Bhargava, Maruti Suzuki's Chairman, said the “partnership or its dissolution does not affect us (Maruti) directly.” SMC has more than 54 per cent stake in Maruti, which accounts for 30 per cent of its revenues and 60-70 per cent of profits.