Slow Suzuki Tests Piech's Patience

Bertel Schmitt
by Bertel Schmitt
slow suzuki tests piech s patience

Uh-oh. Septuagenarian Ferdinand Piech is expressing youthful impatience with octogenarian Osamo Suzuki. Volkswagen’s Chairman of the board “is reportedly irked at the slow progress of his firm’s alliance with Suzuki,” says The Nikkei [sub]. The reason? “A year after Suzuki and Volkswagen agreed on a capital and business tie-up, the track record of their partnership remains devoid of significant accomplishment.”

Volkswagen is urging Suzuki to get on with the show, while Suzuki is dragging its heels. “We did not team up with VW for quick gains,” said a senior Suzuki executive. Piech on the other hand is showing “impatience with what he sees as the glacial pace of progress in their efforts to work out a specific plan for cooperation,” as the Nikkei puts it.

There has been intensive shuttle diplomacy between Wolfsburg and Hamamatsu, which produced exactly nothing. “The time frames in which the automakers are trying to extract benefits from the alliance apparently differ,” says the Nikkei with dry Japanese humor.

VW spent 1.7 billion euro ($2.25 billion) to buy a 19.9 percent stake in Suzuki, and Winterkorn needs to show that there is a ROI if he doesn’t want his head handed to him at the Hauptversammlung, or main shareholder’s meeting next April.

But herein lies the rub: Suzuki received cash when they needed it most, and Volkswagen expects a lot of interest:

  • Volkswagen wants to capitalize on Suzuki’s overwhelming market share in India. VW is nobody in India, while Suzuki owns half the market. One reason for this is Suzuki’s huge presence in India.
  • In China, Suzuki could benefit from Volkswagen’s market dominance. But VW wants Suzuki’s Kei car help to produce the small low-price cars that will be read hot in China’s rural areas.
  • Volkswagen wants to unseat Toyota as #1 carmaker. Together with Suzuki, they could. Alone, no chance. Toyota and GM are having a neck-on-neck race for the top spot (both will probably report more than 8 million cars produced by year’s end) while Volkswagen will probably be a million units behind. Suzuki will end the year well over 2 million.

Suzuki could also use help elsewhere in the world. But their Chairman won’t be asked why he collected $2.25 billion from a bunch of impatient Germans.

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  • Mr Carpenter Mr Carpenter on Dec 10, 2010

    OK I'll try this again! This time, I'll copy my own post before submitting it so if it disappears into the "ether" again, I won't waste so much time typing it all three times... I think it'd make much more sense for Suzuki and Mitsubishi to go in on a full scale merger, than for Suzuki to play footsie with Volkswagen. Think of it like this: Mitsubishi has the book-ends (eco electric and rally performance) with a smattering of SUV in the middle. Suzuki has the middle ground (more towards the smaller end of the car sizing and pricing formula, with a sprinkling of SUV). Suzuki is massive in the best-chance for excellent growth over the next 20 years - India. Mitsubishi is relatively strong in China, has a car factory in the US, a car factory in Western Europe (Holland) and Suzuki has factories in Eastern Europe. Mitsubishi Motors has the backing of Mitsubishi Bank (huge) and Mitsubishi Heavy Industries (huge-r), Suzuki has good backing as well, plus is a conglomerate re: outboard motors, motorcycles, etc. They share a national language, and there could be massive savings by selling some of their Tokyo properties and putting much of the automotive operations away from Tokyo (I believe Suzuki's facilities are outside Tokyo?) Mitsubishi has been through a lot (and hopefully the old adage about tough times making for tough people holds true), and Suzuki-san needs to pass off operations to a new generation - the two companies together could use their best talents and bring forward new management for benefit of the merged company. There would be massive savings on development and engineering costs, purchasing costs, and many world markets would be serviced by one, the other or both (and where they would be service by both, these operations could be merged). I realize that if Suzuki and Mitsubishi Motors merged, most Americans would either say "meh" or be entirely uninterested, but the truth is - the US is a rapidly failing republic and quite frankly, our best years are behind us. So in fact, to Suzuki-Mitsubishi, a presence here is no more important than one in some South American nation such as Brazil or Argentina. If these companies merged, it may well leave VW with a paltry sub 10% ownership and this would then allow the companies to only utilize technologies on an as-needed trade-for-trade basis as minor partners. Personally, I think that'd be better for Suzuki, but nobody really asked me...

  • Abraxas Abraxas on Dec 10, 2010

    More likely Suzuki will merge with Mazda under VW control . Suzuki and Mazda line-up are complementary, also they shared many common Japanese shareholders . After Ford, Suzuki is Mazda most important partner . 4 Mazda models sold in Japan are based on Suzuki cars : Mazda AZ-Wagon ( ), Mazda AZ-Offroad ( ), Mazda Carol ( ) and Mazda Scrum Wagon ( ) .

  • SCE to AUX Historically, the Land Cruiser sold ~3000 units annually in the US for its last 15 years, so the answer is no.
  • Theflyersfan Oh boy - the sequential manual transmission. Otherwise known as "Your 16 year old driving stick the first time is smoother" transmission. I know automakers were trying new things out around this time and seeing what would stick (hint: the dual clutches won out), but even in testing, the Toyota engineers should have said いいえ、ジャンクです。(No. It's a piece of junk.) Is this seller going to get $8500? Doubt it. Way too much interior work is needed and it just looks worn out in there. St. Petersburg - salt air year round can do some wonders under the cover as well. But the exterior still looks good which makes me thing it was garage kept. So, for $8,500 - no chance. But for maybe $5,500 to $6,000 and the buyer doesn't mind some extra work to clean up the interior, maybe a decent top down sun down fun car. Just hope the transmission holds up.
  • Dukeisduke Only if there's a significant price difference between it and the Lexus GX. Otherwise, no. If they do bring it over, they'll have to ditch that ugly grille.
  • Theflyersfan Chris here just gave me a big old dose of nightmare fuel with this. Let me explain... This past Saturday, driving home after doing some furniture shopping. I-64 Westbound is closed for extensive repairs in my part of Louisville so I had to take surface streets home. No problem as it's basically a straight shot from said furniture store to my domicile. Now, I had that recent spinal fusion surgery in my neck complete with four screws, some plates, artificial bone, and the chance that things might not have healed correctly so things are a bit tender and sore still. Driving home in a part of the area named St. Matthews when I pass a Walgreens. Barreling out of this Walgreens and totally ignoring the stop sign, and situational awareness of ANYTHING around him is a truck, very similar to the one shown above. Same color even. It's a four lane road - main drag through town. I'm in the inside lane and this 7,000 pound monstrosity is suddenly feet from turning an MX-5 into shrapnel. Top is down, had my wits, quickly downshift and manage to do a wild u-turn like move into the oncoming traffic lanes but avoided the hit. The neck, however, didn't like the strain and trauma and sent parts of my body into fits of limited sensations and pain. The truck driver, realizing what he's done suddenly stops. My top is down, windows are down, and we make eye contact as I pull alongside the person I have suddenly wished death on inside a flaming pit. And if I repeat the sentences of what was yelled at that jack***es face, I'll be on insta-ban here in milliseconds. He yells over, "Man, I'm sorry...I didn't see ya!" Well, ***face, learn what a stop sign means and scan the scene first. And get something that you can see over and in front instead of the blind spots that hide everyone under the age of 14 in front of the truck. So, I'm all for forcing these overdone, oversized, overfed, overstyled, guzzling, tiny-genital compensating redneck wannabe road monsters taken out back and put to rest and we return to normalcy. Made it home hurting like hell and tests were done today to check for further injury. And that Mazda can turn and spin on a dime... Try that move in that Sierra AT4XBZQZW8! whatever.
  • Dukeisduke I've read stories about that air suspension system - insanely high pressures, and crazy expensive to repair. I loved the Mark VIII's styling back then, but it definitely hasn't aged well.Also:"Mark VII was the first Mark available with dual front airbags..." Did you mean Mark VIII?