Auto giants, Suzuki and Volkswagen, in a slight tussle

One can expect a drastic outcome when auto giants disagree with one another. The situation is quite difficult to express leaving everybody guessing what next. March 2011 witnessed what happened with Maruti Suzuki and Volkswagen; in this case, when Volkswagen told in their annual report that they did intend to influence Maruti’s decision making capacities significantly. The outcome of the above statement was Maruti Suzuki didn’t agree Volkswagen to be controlling them.

Osamu Suzuki, Chairman, Suzuki, told Volkswagen wasn’t talking to them, and that Suzuki didn’t want to be talking to them either. He said Volkswagen didn’t have the technology that Suzuki wanted right now. He told if Suzuki lacked technologies they didn’t have, there were always many companies inside Japan and outside too, and their relations with them were deeper and could be seeking help only from such associations.

Auto giants Suzuki and Volkswagen in a slight tussleThe Volkswagen and Suzuki alliance started in 2009 December. Volkswagen then took 20% charge in Suzuki’s stake and Suzuki making an investment of 2.5% in Volkswagen. The intention behind the alliance was to develop and build electric and hybrid vehicles and plans for expansion in upcoming markets. So far, both the auto giants haven’t closed the chapter of not working together. Volkswagen is busy working on strategies to make their presence felt in the car market in India. Volkswagen is looking forward to previous experience of Suzuki in India to improve their sales substantially.

Until now, it does look like Volkswagen’s investment of $2.9 billion in Suzuki wasn’t going to impair the deal, but a move such as looking for alternative sources for their growth in India is likely to happen. Suzuki, meanwhile, is sourcing Fiat diesel engines to their Hungarian cars. This duel between Volkswagen and Suzuki may look a bit silly, though results might be serious, so a proper solution as to working together or breaking the alliance must be worked out sooner rather than later.

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