The alliance between Suzuki and Volkswagen soured after some comments made by Volkswagen. However, this has not yet affected their business, and there are no plans yet of the two companies ending their two year alliance, which has not achieved much so far.
A spokesperson for VW was quoted as dismissing the reports of the company parting ways from Suzuki to be nonsense. Representatives of both Suzuki and Volkswagen have been very vocal in the last few months about the alliance’s slow progress and a review to be done. During the interim, the Japanese auto manufacturer entered into an alliance with Fiat to increase their diesel engine output from their underused plant in Pune, which is a JV with Tata Motors. This would help Suzuki meet needs for their local division, Maruti.
In industry circles, this was viewed a setback to Volkswagen that was wishing to leverage their alliance and increasing their presence in the Indian auto market, in particular the compact car market. There was a lot expected from this alliance with Maruti’s low cost structure that would great help VW.
From the view point of VW, the partnership with Suzuki is an important input in their strategy of becoming the top auto manufacturer in the world by 2018. The company already has many top brands under its umbrella including Scania, MAN, Skoda, and Audi. Following market potential, after China, India is definitely the most buoyant market.