Uh-oh. Septuagenarian Ferdinand Piech is expressing youthful impatience with octogenarian Osamo Suzuki. Volkswagen’s Chairman of the board “is reportedly irked at the slow progress of his firm’s alliance with Suzuki,” says The Nikkei [sub]. The reason? “A year after Suzuki and Volkswagen agreed on a capital and business tie-up, the track record of their partnership remains devoid of significant accomplishment.”
Volkswagen is urging Suzuki to get on with the show, while Suzuki is dragging its heels. “We did not team up with VW for quick gains,” said a senior Suzuki executive. Piech on the other hand is showing “impatience with what he sees as the glacial pace of progress in their efforts to work out a specific plan for cooperation,” as the Nikkei puts it.
There has been intensive shuttle diplomacy between Wolfsburg and Hamamatsu, which produced exactly nothing. “The time frames in which the automakers are trying to extract benefits from the alliance apparently differ,” says the Nikkei with dry Japanese humor.
VW spent 1.7 billion euro ($2.25 billion) to buy a 19.9 percent stake in Suzuki, and Winterkorn needs to show that there is a ROI if he doesn’t want his head handed to him at the Hauptversammlung, or main shareholder’s meeting next April.
But herein lies the rub: Suzuki received cash when they needed it most, and Volkswagen expects a lot of interest:
- Volkswagen wants to capitalize on Suzuki’s overwhelming market share in India. VW is nobody in India, while Suzuki owns half the market. One reason for this is Suzuki’s huge presence in India.
- In China, Suzuki could benefit from Volkswagen’s market dominance. But VW wants Suzuki’s Kei car help to produce the small low-price cars that will be read hot in China’s rural areas.
- Volkswagen wants to unseat Toyota as #1 carmaker. Together with Suzuki, they could. Alone, no chance. Toyota and GM are having a neck-on-neck race for the top spot (both will probably report more than 8 million cars produced by year’s end) while Volkswagen will probably be a million units behind. Suzuki will end the year well over 2 million.
Suzuki could also use help elsewhere in the world. But their Chairman won’t be asked why he collected $2.25 billion from a bunch of impatient Germans.