Suzuki And VW: And They're Off!

by Bertel Schmitt

Published: January 16th, 2010

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.

#BertelSchmitt #Germany #Japan #Suzuki #Volkswagen

Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

More by Bertel Schmitt

Comments

Join the conversation

9 of 21 comments

Johnny ro on Jan 16, 2010

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.

Like Reply
- See 3 previous
- Psarhjinian on Jan 16, 2010
  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".
  
  Like
- HerrKaLeun on Jan 16, 2010
  
  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.
  
  Like
- Charly on Jan 17, 2010
  
  Public transport may be better in Europe but in the US more people have a second/third car
  
  Like
- Stingray on Jan 18, 2010
  
  And to think that europeans pay a LOT of money for driving expensive, heavy and WAY underpowered POS. *sigh*
  
  Like
Criminalenterprise on Jan 16, 2010

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.

Like Reply
Johnster on Jan 16, 2010

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.

Like Reply
- Kinakomochi on Jan 17, 2010
  
  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.
  
  Like
Qa on Jan 17, 2010

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).

Like Reply