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.”