A two-year partnership between German giant Volkswagen AG and Japan's nimble Suzuki Motor Corp. appeared to be unraveling Wednesday after the Japanese company's chairman said communications had broken down.
"Volkswagen is not talking to us," Chairman Osamu Suzuki told Bloomberg News in an interview. "We have no plans to talk to them."
His comments follow months of disparaging remarks by VW officials about the Japanese company's attitude and retorts from their counterparts at Suzuki about VW's overbearing manner, reported The Detroit News.
"Relations between the two firms have been tense from the start and have seemingly deteriorated even further," said Tim Urquhart, a London-based analyst at IHS Automotive.
In 2009, when VW acquired 19.9 percent of Suzuki for 222.5 billion yen, or $2.9 billion, the deal was viewed as a coup for the German automaker. It was expected to gain access to the low-cost carmaking technology that has made Suzuki a leader in India.
The two companies said they intended to cooperate on technology, including hybrids and electric cars, and vehicles for emerging markets. But almost two years later, no joint projects have been announced.
Surprisingly, Suzuki decided in June to order diesel engines from Fiat SpA of Italy.
Some analysts sensed strains from the outset, as Suzuki stressed that it wanted to remain independent.
According to Bloomberg, the latest tensions were sparked by VW's reference to Suzuki in its annual report as an "associate" that it could significantly influence.
VW sold 7.2 million vehicles in 2010, more than double Suzuki's 2.6 million unit sales in its last fiscal year, including 1.1 million in India.
"Suzuki really needs a big manufacturer behind it, so the effect of a withdrawal would be far worse for them," said Aleksej Wunrau, a Frankfurt, Germany-based analyst at BHF Bank AG. "Volkswagen could very well step back from Suzuki and either seek another partner or start afresh on their own in Japan and India."
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