Suzuki Wanted to Sell Re-badged Jetta Hybrid in the US

In a detailed report on the failed alliance between Suzuki and Volkswagen, Automotive News reports that the Japanese automaker wanted to re-badge and sell Volkswagen Jetta Hybrids in the U.S. before the company eventually decided to close up its local sales arm.

The report, which came out on Monday, is a play-by-play of what happened from the time Suzuki CEO Osamu Suzuki and Volkswagen AG CEO Martin Winterkorn first shook hands in 2009, to when Suzuki announced it was cutting its losses, up to today as the automakers struggle over VW’s 19.9-percent ownership of the Japanese automaker.

The original agreement, which would open the door for Suzuki to use advantaged Volkswagen powertrain technology while also giving VW a view into Suzuki’s Indian success, is said to have not been respected by Volkswagen.

From Automotive News:

“The alliance is meaningless,” Harayama told his interlocutor, according to internal Suzuki documents chronicling the demise of the alliance that were obtained by Automotive News.

“Our engineers have lost the desire to cooperate with VW.”

A tipping point, Harayama added, came during an earlier top management meeting. The Suzuki side presented VW CEO Martin Winterkorn a list of complaints. But the tactic backfired.

According to Suzuki’s version of events, instead of contemplating Suzuki’s suggestions for mending relations, the ticked-off German surprised the Japanese by pounding the table in irritation.

“With this, we understood that it is impossible to work with top management to resolve the front-line problems,” Harayama told an off-guard Wittig, who insisted he hadn’t come to the meeting to negotiate with Harayama. “We want a ‘yes’ or ‘no’ answer about whether we will hold joint discussions,” Harayama demanded before excusing himself to catch his flight home.

The conclusion of the failed alliance won’t be known until a decision is made by the ICC International Court of Arbitration. However, there are some interesting tidbits to take away from the report, such as Suzuki’s want for Volkswagen cars to badge as their own.

At one point in the negotiations, Suzuki hoped VW would supply its Jetta Hybrid sedan and other vehicles through Suzuki’s North American sales network, the documents revealed. Tweaking its own cars to meet American specifications increased Suzuki’s development man-hours by half.

“It is becoming difficult for Suzuki, a company focused on compact cars, to bring together a North American product line sufficient to continue operating a N. American sales network,” Suzuki said in one document before the tie-up that outlined the items it wanted incorporated into a VW agreement. “The development cost burden is heavy.”

If you have a chance (and a subscription to Automotive News), the report is worth a read. However, you might want to read Matt Hardigree’s take on reading business stories immediately after.