By on July 7, 2011

Things are not going well between Volkswagen and Suzuki. In 2009, Volkswagen invested $2.5 billion for a 19.9 percent share in Suzuki. Suzuki sent $1.13 billion back and bought 2.5 percent of Volkswagen. Suzuki netted $1.37 billion, domo arigatou gozaimasu, but then nothing happened. End of last year, Ferdinand Piech became impatient. Volkswagen stockholders asked discomforting questions at the annual meeting. Now, it turned into a war of the words. Volkswagen uses old media. The octogenarian Osamu Suzuki drops a massive blog bomb on Wolfsburg.

A month ago, Volkswagen leaked to Der Spiegel that the German-Nipponese axis is “a big disappointment.” Old prejudices were unearthed. “Suzuki wants as much modern technology as possible from Volkswagen, but is not willing to reciprocate,” wrote Der Spiegel after an obvious (but unsaid) tête-à-tête with Martin Winterkorn, who allegedly said that “the Japanese still need some training in proper cooperation.”

Now, Osamu Suzuki fires back. He could have summoned a few trusted Japanese journos and dropped some deniable off-the-record remarks. He did not. He sat down and wrote a blog that was published in The Nikkei [sub] in the Japanese language. Suzuki uses strong language:

  • “Since the companies differ in size, people of Volkswagen may develop a mistaken impression that Suzuki is placed under their umbrella.”
  • The initial basic agreement seems to falter.”
  • We learnt about Volkswagen’s technologies, but we did not find any one of them interesting enough to adopt immediately.”
  • “If we are short of any technology, we have an option to ask other companies with which we benefit from technological exchanges.”

Oddly enough, the piece never made it to the English wire of The Nikkei, and a Google search tells me that it was only circulated in Japan. Here is what I believe is a faithful translation from the Japanese, uncut.

“Blog by Osamu Suzuki

Present and future of cooperation between Suzuki and Volkswagen

It has been one and a half years since Suzuki signed a partnership with Volkswagen in December 2009. Many people criticized us for being unable to announce any specific fruit of the cooperation. Let me summarize what I have in my mind.

Lately, people of Volkswagen are telling their shareholders that Volkswagen can largely influence the corporate policy of Suzuki. I feel somewhat uncomfortable with the statement because the two companies agreed to remain independent partners on an equal footing when we signed the partnership in the first place. Since the companies differ in size, people of Volkswagen may develop a mistaken impression that Suzuki is placed under their umbrella. However, Suzuki signed the agreement under the condition of being an equal partner. Thus we cannot simply accept this notion. The two companies have been having a lot of exchanges. We learnt more about Volkswagen. I assume that Volkswagen gradually developed understanding about Suzuki. As a result, the initial basic agreement seems to falter.

Does Suzuki face an immediate difficulty? The answer is “Not at all.” We learnt about Volkswagen’s technologies, but we did not find any one of them interesting enough to adopt immediately. Suzuki is working on its own green technologies. Our engineers are gaining more capabilities than I expected, and are developing surprisingly good technologies. For example, our new minicar engine that was developed for the first time after 16 years enjoys class-leading fuel efficiency in Japan. We are producing more than 200,000 units of our diesel engine, which is attracting a lot of attention, in India. Thus for the time being, particularly in critical markets like the minicar market and India, we are not in a hurry to collaborate with Volkswagen. Suzuki is also working on eco-friendly cars. One example is our original EV equipped with a standby generator, which is under development for commercialization.

If we are short of any technology, we have an option to ask other companies with which we benefit from technological exchanges. Supply of diesel engine from Fiat that was announced the other day is one example. Technology race intensifies in the auto industry. The scheme of capital participation to take control of another carmaker will no longer work. We need to remain independent to be perceived as an attractive partner by other automakers around the world. According to a recent report by a major German business magazine, Volkswagen seems to gain visibility of developing low-priced cars for emerging markets such as South America and India. I am relieved.

I assume that many of you are interested in what would happen to Suzuki’s relationship with Volkswagen. We intend to continue having dialogues in all sincerity with our partner in order to build a relationship of equality. After all, this has been the purpose of joining hands with Volkswagen. I will do my utmost to develop Suzuki into an independent and distinctive company, and measure up to our shareholders’ and users’ expectations.

I am increasingly excited in face of many challenges. Recovery from the earthquake is urgent. We have to do it NOW. I am certainly older, but I am ready to continue working hard with the employees of Suzuki.”


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35 Comments on “Osamu Suzuki Blog Bombs Volkswagen...”


  • avatar
    friedclams

    I’d be proud to have this guy as my CEO. This is a very canny post.

  • avatar
    Robert.Walter

    Seems like a cool old dude.

    Mea culpa: I posted a comment in the piece about Toyoda-san’s house, and listed up the family-owned companies that, after ample consideration, came to my mind. It was, due to no measure of disrespect, rather my own weakness, that I forgot about Suzuki-san; he was simply, but (as reflected by his comments above) unjustifyably, off my radar.

    I have also written elsewhere that context is important, and that every properly-delivered message should be tailored to a specific audience (the audience need not be homogeneous, and is often not, this serves to require a more nuanced text), so I found his comments very interesting, and wonder why these words now… What is the context that triggered this statement, and who is/are the intendend recipients of his (for a Japanese, extremely-pointed) message?

    Re. Marty and his the boys in the Hochhaus in WOB, or the crafty (also) old dude in the lake mansion in Austria, I have to wonder if their equity participation was, in the short-term, a way to (as Bertel pointed-out before) gain some creds in the Kei-segment, or japanese-/indian-markets, or, perhaps, in the longer term to just buy into the company, as a kind of “external primagenture insurance policy”, run by this interesting, but aging, man, and then to wait for what has been termed (again Bertel) the “biological solution”.

    • 0 avatar
      th009

      It’s worth noting that while Osamu Suzuki is running the company again, and is married to the grand-daughter of the founder, it’s not quite the BMW scenario of an independent family-owned company. VW is the largest shareholder, and owns as much as the next six (mostly Japanese financial institutions) put together. So technically a hostile takeover would be quite possible.

      However, clearly VW wants (and should) do it on friendly terms in order to keep the management team on board. Osamu Suzuki does not have a clear successor: his son-in-law died of cancer, and he ended up reclaiming the president’s role.

      For Piech, this may be a long-term play more than anything …

  • avatar
    tom

    One thing is for sure: Piech will not like this. And as we all know, it’s never a good idea to mess with him. I’m sure he is on top of everything.
    I mean MAN also said that they were independent and look who’s running the show now. Buying Diesel engines from Fiat will only increase Mr. P’s determination…

  • avatar
    Dr. Kenneth Noisewater

    If Honda keeps on fighting with Toyota to be the Japanese Buick, it’d be nice to see Suzuki become the next Honda… With _ENGINEERING_, light weight, cutting-edge tech, etc. It continually surprises me that the goodwill that the motorcycle arm garners with the Gixxer, Busa, V-Strom, etc. just does not translate in any way whatsoever to their cars. Baffling.

    • 0 avatar
      mike978

      Why baffling? Most of their offerings (limited as they are in the US) are not that great, the Kizashi midsizer the sole exception.

      I don`t know what in the world of car technology Suzuki has brought. Whereas VW has some technologies of merit – whether diesel engines, DSG transmissions of TFSi gasoline engines.

      Being equal partners is a fallacy – one company sells many more cars, has much greater revenue and profit than the other company. Is that equal? As others have said VW is playing the long game – they have the money and stability to do that.

      • 0 avatar
        Dr. Kenneth Noisewater

        It seems to me that only Mazda is building ‘interesting’ Japanese cars, rather than appliances designed to tick off bullet points on a segment list. Considering the sort of thing the Suzuki name stands for on two wheels, it’s a f–king waste that they have nothing 4-wheeled to sell (or cross-sell) to Americans who would consider Suzuki a ‘cachet’ performance brand thanks to the Hayabusa, GSX-R, etc.

        Perhaps they’re just too small to develop 4-wheeled product that could capitalize on their 2-wheeled reputation.

      • 0 avatar
        mike978

        “Perhaps they’re just too small to develop 4-wheeled product that could capitalize on their 2-wheeled reputation.” – I agree, hence why I am surprised they could find nothing of interest in the VW group which specializes in making passenger cars.

      • 0 avatar
        mazder3

        +100 Dr. Kenneth Noisewater!

        Why hasn’t the ‘Busa engine gone into a CRX sized car or in a convertible? Yeah, it’d be a torqueless wonder but 197 HP out of 1.3 liters!

      • 0 avatar
        Matthew Sullivan

        @mazder3:

        A lack of torque didn’t seem to hurt Honda!

      • 0 avatar
        sportyaccordy

        Suzuki does have the Busa lump in a 4 wheeled device- Radicals

        I personally think it is high time for folks to reconsider what we want out of cars. I think something like a Radical w/o the super high performance threshold or specialized track bred parts would do well and be cheap. I’d rather buy one of those for $10K than a Civic Si for $20K. And they could be made to have more weatherproofing than a bike.

        As far as Suzuki/Volkswagen, I am not sure what they were hoping to come out of it. The only thing I can see VW getting out of the deal is first dibs on Suzuki’s corpse which would be their in into the Japanese market.

  • avatar
    wsn

    “We learnt about Volkswagen’s technologies, but we did not find any one of them interesting enough to adopt immediately.”

    Very true, if you look at what VW is selling in China (and that VW doesn’t really sell much in the US even after continuous 20% gains).

  • avatar
    StevenJJ

    “Since the companies differ in size, people of Volkswagen may develop a mistaken impression that Suzuki is placed under their umbrella.”

    If anyone is going to do it their own way with absolutely no yield it’s the Japanese. Absolute mistake to have thought otherwise. These guys will go ‘to the death’ literally and metaphorically doing it their own way even if it’s blatantly wrong purely on principle. Whatever principle that may be.

  • avatar
    delpiero1980

    I’m glad it happened. VW has been wanting to own Suzuki for a while. Can’t VW understand that being #1 manufacturer in the world by owning 10+ brands is not the way to go??? Old GM, remember that VW???
    On the Suzuki side, Asians are very tough when it comes to being equal. The US has many restrictions in Korea and Japan to import their vehicles and we all know the story of China when it comes to do business with them.
    Contrary to what Mr. Suzuki said, VW has a lot of tech to offer. They own Audi, Lambo, Bentley and Bugatti. Just the Bugatti alone has a 16 cyl engine based on Wolfsburg 4cyl turbo engine. Diesel tech like the Blue Concept Sport that Audi and Porsche will get their variants from, the Hybrid Touareg, etc.

    I just think they are afraid of VW that they want to take over and they are right. VW is to big and they will fail if they don’t get rid of half their makes. Bugatti, Skoda and SEAT need to go for starters.

    • 0 avatar
      hreardon

      delpiero1980 -

      I don’t know if I agree with that blanket statement that because GM screwed the pooch and couldn’t differentiate its brands, nobody else can do it.

      If anyone, Volkswagen has demonstrated the *proper* way to handle a large portfolio of brands. Of course there is the potential for a GM-esque screw up, but not necessarily a given. VW demonstrated this in the early ’00s when it became apparent that Europeans were trading down to Skodas from VWs because they were cheaper and essentially offered the same technology and owner experience. Since then VW has done a very good job of differentiating its brands, not just with marketing but with actual platforms and offerings.

      • 0 avatar
        Matthew Sullivan

        @hreardon

        My recollection is that VW also started de-contenting Skodas and SEATs because they were *too* competitive against VWs.

        When a car company intentionally does not make its cars as good as they can be, I think they are playing a dangerous game.

        Porsche seems to get away with it, though.

      • 0 avatar
        th009

        In spite of the increased brand differentiation (any decontenting was relatively minor in the end), Skoda sales continue to be on a strong upward trajectory.

        Seat is the problem child of the family, though, and the state of the Spanish economy does not help it any.

      • 0 avatar
        delpiero1980

        There was a time when all GM’s brands were selling very well especially in the 90s. The problem is that once you reach #1 they for some reason lose quality control and there car start to resemble more. Back in the late 90s I always said that GM needed to get rid of half their bands before heading to their demise. No body believe me. I also said the same about Ford, and they did. Only Ford and Lincoln remains. VW will fail. They already have reliability issues. Greed is the mother of all f***ups

  • avatar
    L'avventura

    Since its in the title of this post, I’ll point out a correction:

    Its not “Osamo” its “Osamu” Suzuki. Not the worst mistake, I’ve him mistakenly refereed to as “Osama” Suzuki.

    Either way, even looking from the outside predicting what each company wants from each other is fairly obvious. VW obviously is the larger company with a diverse lineup, and Suzuki is an expert in microcars and India. What I don’t understand is why more of these details couldn’t be hammered out before the partnership was finalized and $2.5B exchanged hands.

    At the same time, Suzuki clearly is not in a position to make demands on VW, at the same time Suzuki is neither in a position where they necessitates taking a bum deal from VW.

    So what at first seemed like a match made in heaven, with lots of synergies, and non-overlapping expertise, in reality is also what keeps them from making a deal.

    • 0 avatar
      Matthew Sullivan

      @L’avventura

      You said: “What I don’t understand is why more of these details couldn’t be hammered out before the partnership was finalized and $2.5B exchanged hands.”

      Maybe the deal was negotiated by the same VW staff who paid $400 million for Rolls Royce only to find out afterward that their deal did not include the legal right to use the “Rolls Royce” name!

  • avatar
    tced2

    I’m beginning to detect a pattern here: German auto companies don’t “partner” too well with foreign companies. Diamler and Chrysler “a merger of equals”. I always had reservations that a company that makes $50k cars running a company that should make $20k cars. The VW and Suzuki situation is a bit different, but the Germans seems to always assert their running the show with poor results.

    • 0 avatar
      rnc

      You are correct, I remember the first executive meeting of the merger of equals of daimler-chrysler. The Chryco execs carpooled in minivans while the the daimler execs showed up in thier pullman limo’s they flew over for the occassion. While the Chryco execs referred to the company as D-C, the daimler execs referred to chryco as “business unit 29″

    • 0 avatar
      Acubra

      Yeah, BMW and Rover/Land-Rover come to mind…

      • 0 avatar
        mike978

        Not comparable – BMW took over Rover. So they were in charge and after trying to resurrect Rover (Rover 75 as an example) it proved to hard and they kept Mini to great commercial success. So this cannot be used as evidence of an alleged trend.

  • avatar
    Bryce

    Easy to believe Suzuki see no gain from VW tech esrecially diesel tech VW is way behind PSA and Fiat there. The US has so many tariffs and restrictions noone can blame Japanese makers for abandoning that market China is where its at now not the US.Mazda make a good semblance of a European car the only jappa that handles well enough to consider Suzuki is trying to do the same to get into Europe and China does anyone really think American sack of shit handling is wanted in China or anywhere else? NO its not.

  • avatar
    Robert Schwartz

    “domo arigatou gozaimasu”

    I hope that those are not the Japanese words for the unholy and accursed B word.

  • avatar
    Domestic Hearse

    Suzuki’s blog is certainly laced with a very pro-Japanese bia…

    Oops.

  • avatar
    brandloyalty

    “It seems to me that only Mazda is building ‘interesting’ Japanese cars, rather than appliances designed to tick off bullet points on a segment list. Considering the sort of thing the Suzuki name stands for on two wheels, it’s a f–king waste that they have nothing 4-wheeled to sell (or cross-sell) to Americans who would consider Suzuki a ‘cachet’ performance brand thanks to the Hayabusa, GSX-R, etc.

    Perhaps they’re just too small to develop 4-wheeled product that could capitalize on their 2-wheeled reputation.”

    I’d say that the SX4 and Grand Vitara are a cut above being just appliances in their niches.

    Suzuki tried to identify the Grand Vitara with their motorbikes in one or two commercials, but it didn’t work. Probably linking an suv with a sport bike is just not credible. To justify the Equator (rebadged Frontier), Suzuki said they were providing a pickup for owners of Suzuki motorbikes to carry the motorbikes in. It appears this was somewhat of a stretch also.

    Then the Kizashi fell flat, probably because of such utterly commonplace styling that I can’t recall ever seeing one. Why didn’t they link it to their motorbikes?

    I am impressed that Suzuki can engineer a unique design like the Grand Vitara. But they just can’t get their marketing right to make a dent in North America. Some of the junk they used to sell, and Consumer Reports-hate hurts them a lot.

  • avatar
    obruni

    on one hand, I hope Suzuki brings the new Swift to the US market.

    on the other hand, I’m not sure if the Swift will save Suzuki here.

  • avatar

    Is this the same company that thinks its Sizashi, or whatever, can out corner a stretch limousine and outrun a motorised sofa?
    The technology and the advanced thinking boggles the mind.
    If it wasn’t for Indian sales, this outfit would be gone the way of SAAB by now.
    And as usual, the Germans are demonstrating their arrogance over a weak opponent.

  • avatar
    eldard

    Osamu and bomb in the same sentence. Who woulda thunk it?


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