Suzuki Motor says it will buy back VW stake as court settles feud

31 Aug 2015 | Author: | No comments yet »

Suzuki Plans to Go It Alone After Ending Four-Year VW Dispute.

After four years of dispute, arbitrators upheld Suzuki’s request to terminate a 2009 agreement that never yielded a single joint project with the German company. As a result, Volkswagen will sell its 19.9 percent Suzuki stake, which is valued at about 463 billion yen ($3.8 billion). “The past six years have been a very valuable experience,” Chairman Osamu Suzuki, who brokered the deal, told reporters in Tokyo on Sunday. “I came to realize there are companies different from us,” and as a result, independence will be a “precondition” for future dealings. Suzuki, a specialist in inexpensive cars, is smaller than global rivals like Volkswagen, which sells about four times as many vehicles as its former Japanese partner. That puts pressure on Suzuki to safeguard its dominance in India and control rising development costs for green-car technologies, while pursuing a goal to boost annual revenue to 3.7 trillion yen by March 2020. “Any potential partner would be quite worried about what sort of partnership it would have with Suzuki after what happened with VW,” said Ashvin Chotai, managing director of researcher Intelligence Automotive Asia. “The culture of Suzuki is not very conducive towards working in a joint venture.” The goal of the pact with VW was to cooperate on small, fuel-efficient cars for emerging economies, providing Suzuki with access to technology while giving VW a wider role in the Indian market through Suzuki’s business there.

Fiat Chrysler Automobiles NV Chief Executive Officer Sergio Marchionne, who is prodding the auto industry to consolidate, has expressed interest in talking with Suzuki in the past. Fiat wasn’t available to comment outside regular office hours on Sunday. “Suzuki will certainly enter into partnerships, but to do that they don’t have to get married,” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. “Scale isn’t the secret to happiness.” The Hamamatsu-based manufacturer may instead focus on targeted development projects in areas such as fuel cells and autonomous driving, said Takaki Nakanishi, an auto analyst at Jefferies Group LLC.

Suzuki said that VW has to sell the stake back to them or a party of the Japanese company’s choosing, while VW said the buyer of the stake hasn’t been decided yet.

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