By on January 16, 2010

Nice couple: Suzuki and Winterkorn. Picture courtesy dawn.com

Yesterday, Volkswagen became the Suzuki’s top shareholder. VW transferred $2.4b in return for a 19.9 percent stake in Suzuki. Suzuki turned around immediately and used $1b of the money received to buy stock in Volkswagen. Consider the couple as intertwined.

With the marriage sealed, both companies went right to work.

Suzuki will standardize their parts development and procurement with Volkswagen, starting as early as fiscal 2010, Osamu Suzuki told The Nikkei.

They are not adverse to co-developing new vehicles, but “we like to start off with using common components in our existing offerings because developing a new model will take at least three years,” Suzuki said. 3 years if they hurry.

They do not plan to share each other’s sales networks. Said Suzuki; “It’s better for each brand to handle its own marketing.” Volkswagen will vehemently agree. They are big fans of “Markentrennung” (brand separation) in Wolfsburg.

Suzuki wants Volkswagen’s environmental technologies, and will get them. Both will exchange midlevel personnel at headquarters, and possibly engineers, on a project basis.

Also, Suzuki’s buying of diesel engines from Renault, PSA, and Fiat will stop. VW will supply all of Suzuki’s diesels. Suzuki’s technology tie-up with GM will likewise end next month.

The fusion of Suzuki and Volkswagen progresses faster than thought. Both seem to be in a hurry and are doing the right steps. Expect more than the one solitary sushi bar in Wolfsburg. And who knows, maybe they’ll serve the famous Volkswagen Currywurst on select Thursdays at the cafeteria in Hamamatsu, Japan.

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21 Comments on “Suzuki And VW: And They’re Off!...”


  • avatar
    Jimal

    Hmm… a TDI Kizashi? Or more to the point a TDI AWD SX-4? Interesting…

  • avatar
    John Horner

    The long dark winter of Daewoos badged as Suzukis continues to recede into the haze.
    One must wonder what Suzuki’s intentions are in North America for the years to come. If they are smart, they will simply give up and focus their efforts in growth markets. Let Volkswagen bang its head against that tree.
     
     

  • avatar
    HerrKaLeun

    I think it’s good for them to use common components and use the VW diesels. Helps VW to produce them cheaper, and will hurt the competition that will sell fewer diesels. Maybe they drop the VW small cars (below Polo) altogether and let Suzuki handle that?
     
    for the sake of both companies, I hope they don’t continue their unreliability and bad reputation among costumers. they both kind of have nice cars in their niches, but the repair cost and reputation for both is horrific and a deal breaker to me.

    • 0 avatar
      dancote

      Where do you get your information about Suzuki reliability?, repair costs?, reputation?
      We’ve been driving various Suzuki models since the early ’90s and have had nothing but excellent reliability and repair costs (the few we’ve had) are not out of line.

    • 0 avatar
      Disaster

      In Consumer Reports 2009 relibility poll Suzuki was ranked 13th with no cars below average in reliability.  There were, however, only two Japanese manufacturers worse than Suzuki; Mazda and Nissan.  Volkswagen was much lower on the poll, 21st, and had the worst vehicle in the poll.

    • 0 avatar
      HerrKaLeun

      I don’t know about the US… but I know that in Germany they basically rust through within 10 years and have a few repairs every year. On the other hand, in Germany VW seems to have good reliability, but not in  the US. suzuki had pretty bad TÜV (the mandatory bi-annual safety inspection) for 5+ year old cars becasue structural components were corroding. I’m sure they improved since then… but costumers have elephant memories.
       
      you mean Suzuki as a brand was 13th? that’s not that great. I assume Toyonda was higher, Mazda,  and a few. so they probably are above Chrysler and GM. Being 13th means there are 12 brands that are better. Not really a big winner to me.  Of course VW is 21st. with electric gremlins and completely clueless dealers it doesn’t surprise me.
      Maybe one thing that keeps Suzuki semi-reliable is the lack of much modern technology.

      they sold the Swift in the 90’s , which was the same as a Subaru Justy with FWD and which was like any other GM car at that time. Possible separating from GM improved their product (it couldn’t get any worse from what they had int he 90’s … like Kia/Hyundai)

  • avatar
    johnny ro

    1- I agree Suzuki understands reliability. Its a very successful Japanese manufacturer. Hell and death to GM for the Daewoo debacle in US. I love my GS500F and my SV650.
    2- I am a GAAP accountant. I get dizzy with thinking how to account for the back and forth investment. Have to go look that up. Will wait for Monday morning though.

    • 0 avatar

      Don’t worry. I know their CFO H.D. Poetsch. What he does is watertight and always very tax-efficient. As an accountant you will know that stock swaps are usually very tax efficient.

    • 0 avatar
      johnny ro

      I think for IGAAP, VW uses equity method for its investment in Suzuki. Must back out 10% of whatever method Suzuki uses for its investment in VW, which is likely FVPL but should really be equity method. How could VW assert Obamu advice not significantly influential?
      That may have been a classic accountant question – skip past the big picture to how it looks on balance sheet/ income statement.  “Congratulations on meeting the love of your life, now please sign here for tax return”. Overall I do get a warm fuzzy feeling about their hookup.
      This does not mean either will bring desirable “can’t have” cars to USA. Thats our fault.

  • avatar
    jimpen

    Does this mean we can look forward to some new reviews of Suzuki’s North American offerings?

  • avatar
    educatordan

    After seeing the reviews Suzuki’s CVT is receiving, I hope that they get a chance to use VWs DSG transmissions as a manual alternative.  Personally I’d rather have the honest to god manual, but I know that most of the population is not going to be that involved in driving.  :(
     
    FYI, I wish we could throw Suzuki some kind of party for surviving their “hookup” with GM.  GM is like one of those sleazy guys you know who has been married about 10 times and left each bride a broken wreck.  You can’t figure for the life of you how he keeps getting women to get hitched with him.

    • 0 avatar
      tedward

      I agree wholeheartedly. Unfortunately VW/Audi uses CVT’s as well. Having recently been in an A4 so equipped I can say that it is extremely cheap feeling and an obvious weak link. FWIW I just drove a new (2 weeks old) Maxima, and that transmission was glaringly awful too, despite reviewers claiming that Nisaan had finally gotten it right. The Maxima had the better engine, but at anything other than a traffic crawl the transmission was obviously sub-par.

      I wouldn’t be suprised if we saw the opposite trend here with transmission technology. VW probably wants a cheaper transmission than the DSG for NA markets, and I’d bet, if anything moves transmission-wise, we’d see the Suzuki CVT in upcoming Polo’s, Golf’s and Jetta’s. Shame, shame, shame.

  • avatar
    johnny ro

    German reliability vs american reliability. This probably calls for an article. The meaning does not really translate, I think.
    In USA, complaint is “my seat belt buckle keeps getting stuck with French Fried potatoes from Burger King. McDonalds is less of a problem because they are more reliably cut to length. And my mascara pen fouled the seat rail. My Lawyer says to sue you.”  “My engine sludged up, yes I changed oil with proper spec on time, no I can’t prove it.” “My headlight went out. This car is unreliable.”
    I think in Germany, its more like, “Sorry sir, your car failed the brake test on the dynamometer, you need new proportioning valve to pass.”
    Actual corrosion is the same in both places but people don’t complain (i.e. don’t notice) in USA unless the paint on the galvanized body bubbles visibly.
     

    • 0 avatar
      psarhjinian

      German reliability vs american reliability. This probably calls for an article. The meaning does not really translate, I think.
       
      Yes, in Germany your car is more likely to be leased by your employer and the public transportation system doesn’t suck.  Ergo, if your Audi doesn’t start for the eighth time in three months it’s not such a big deal.
       
      In North America, people actually, you know, depend on their cars more and tend to get a little testy if they don’t work.  The Japanese, crafty devils that they are, discovered this huge, untapped market of people who like their cars to a) run and b) be cheap to keep up.

      Europeans also seem to be of the opinion that, if you have trade the need to remove the entire engine to change the oil filter in exchange for five more horsepower, it’s worth it.  They’re also of the opinion that your warranty repair service isn’t complete unless you’re mugged, beaten, and left for dead outside the service department: that’s part of the “premium experience”.

    • 0 avatar
      HerrKaLeun

      there is also the fact that Americans on average drive 15,000 miles ayear, Germans 15,000 km a year. with 1.6 times the distance driven every year, any break down will happen sooner.
      In addition the TÜV and AU (safety/emission) checks and higher registration tax on older more polluting cars makes older cars less economical, hence they get recycled after 12 years since bringing them to pass inspections is expensive. similar in Japan.
      Also more motors are introduced to keep up with fuel economy demands (at $8 per gallon) and there is a larger choice of motors. More motors means less resources to fully test each of them. When you a Golf you have 5 gasoline and 4 diesel motors to chose from. No wonder cars are more expensive.. too much overhead. One normal motor and one sport motor would be enough. this all costs reliability and mature drive trains. Funnily, the Japanese and Korean companies sell cars with only 3-4 motor options successfully in Germany.
      It’s the German way of making things so good, that they get so complicated that in the end it is less reliable.

    • 0 avatar
      charly

      Public transport may be better in Europe but in the US more people have a second/third car

    • 0 avatar
      Stingray

      And to think that europeans pay a LOT of money for driving expensive, heavy and WAY underpowered POS.
      *sigh*
       

  • avatar
    criminalenterprise

    I am hopeful that Suzuki will morph into an American Skoda.  And that there’s now a remote possibility for a new badge-engineered NSU TT.

  • avatar
    Johnster

    I keep thinking that since Suzuki no longer shares the production facility with GM at Ingersoll, Ontario, Canada, perhaps now they will share the new Volkswagen’s new plant in Tennessee or even the one in Mexico.
     
    But, yeah, this marriage sounds promising.

    • 0 avatar
      kinakomochi

      Suzuki’s cars as of ’08 seem to have crested a legacy of powertrain and electrical problems. As a Suzuki powersports tech, I saw much the same sea change happen with their bikes and ATVs in the ’99 model year — ironically, the same year Johnny Ro’s SV650 debuted. The key was an influx of cash from a growing relationship with Kawasaki… as a result, the present-generation SV650 is a carefully-evolved machine which gives huge value, near-peerless reliability, and the ability to satisfy both roadracers and beginners, even better than its carbureted predecessor. (Sorry about the GS500F, though Johnny… dress it up in Gixxer clothes —  it’s still a GS500 underneath, which has many unresolved problems that will not be retooled for.)
      It seems as though the SX4 has been developed in much the same way — start with a good design and a bit of cash from a collaboration (with Fiat), resolve inevitable teething problems on the fly promptly, make them stock the next model year. Hopefully their merger with VW will bring some VAG engineering solutions to apply to this potential-packed little gem of an AWD car, esp in regards to its efficiency — bringing VW’s proven direct injection to SX4 and other models  would solve both its power and efficiency problems, without major investment in tooling. Hopefully Wolfburg’s corporate mantras won’t drown out Suzuki’s ability to design all their vehicles with the same care they did with the SX4, nor mess with the stellar response they’ve given to problems in the field… just enhance them. Like Ford with the Mazda3, let mergers allow acquisitions to do what they do best, just better.

  • avatar
    qa

    Yeah, it’s unfortunate that VW places low on reliability. Between my parents and I, we had VW’s and Honda’s and all I can say is while the VW’s had personalities and were fun to drive, the Honda’s were like bulletproof appliances and held their resale values. 

    Perhaps this marriage with Suzuki may offer VW a trick or two on how to improve reliability. Whether it’s cutting back on engine options, simplifying, improving electronics/electricals or what not. They got to improve on that image/ perception. It may take years (like Hyundai).

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