Volkswagen And Suzuki: Shots Fired

Bertel Schmitt
by Bertel Schmitt
volkswagen and suzuki shots fired

In the long simmering conflict between Suzuki and Volkswagen, the gloves are coming off and we are having a bit of domestic violence. Volkswagen just said in an emailed statement:

“The review of the partnership with Suzuki Motor Corp announced by Volkswagen Aktiengesellschaft has brought its first results. Volkswagen stated in Wolfsburg on Sunday that the company is serving notice of an infringement by Suzuki of the cooperation agreement concluded in December 2009.

The notice concerning the infringement relates to the supply of diesel engines produced by another manufacturer to Suzuki. Volkswagen takes the view that this contradicts the terms of the cooperation agreement. Suzuki has now been given a period of several weeks to remedy the infringement. Volkswagen considers this step regrettable, but necessary, and has offered to discuss the matter with Suzuki. At the same time, the company stresses it still regards Suzuki as an attractive investment.”

At this point (11:48 in the evening in Tokyo and a Sunday in Wolfsburg) it is unclear what the “notice of infringement” will trigger. It depends on how the contract is written. Typically, these contracts stipulate that the party that has been notified is given a chance to rectify the infringement. In this case, it would mean that Volkswagen expects from Suzuki that it at the very least cancels the diesel engine deal with Fiat. An even more welcome step would be that Suzuki places an order with Volkswagen. Both seem to be unlikely.

If Suzuki doesn’t rectify the alleged infringement, then Volkswagen can hold Suzuki in breach of the contract. What happens thereafter again depends on the language of the contract. Typically, an act like this signals the impending end of the alliance. These notices usually serve to establish “cause” that allows an unilateral termination of the contract.

I’d read the claim that Volkswagen “still regards Suzuki as an attractive investment” not as a peace offer, more like a statement that bolsters future damage claims. Volkswagen ominously says that this may not be all:

“This review has not yet been finalized.”

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  • OldandSlow OldandSlow on Sep 12, 2011

    One day later: It sure looks like Suzuki's reply to the legalese "shots fired" unleashed by VW is to simply tell Wolfsburg, - "It's over."

  • JSF22 JSF22 on Sep 12, 2011

    Clearly none of us know what the contract says, but you don't do this if you want to continue an amicable partnership. My guess is that VW is throwing anything it can against the wall in hope of getting as much of its money back as possible. Suzuki should give it all back and be happy to be rid of them.

    • Mike978 Mike978 on Sep 12, 2011

      Why would VW sell the shares back? Because Suzuki asks?? If they are making a profit then VW gets a return on their investment. They have no obligation (unless in the contract) to sell back shares - 19.9% (my apologizes for rounding up to 20%) still gives them a commanding position to extract concessions or make a takeover. Suzuki is a second tier player in an increasingly consolidated industry. They have a good position in India, great! Lets see if that sustains them.

  • RHD Any truth to the unconfirmed rumor that the new, larger model will be called the bZ6X? We could surmise that with a generous back seat it certainly should be!
  • Damon Thomas Adding to the POSITIVES... It's a pretty fun car to mod
  • GregLocock Two adjacent states in Australia have different attitudes to roadworthy inspections. In NSW they are annual. In Victoria they only occur at change of ownership. As you'd expect this leads to many people in Vic keeping their old car.So if the worrywarts are correct Victoria's roads would be full of beaten up cars and so have a high accident rate compared with NSW. Oh well, the stats don't agree.
  • Lorenzo In Massachusetts, they used to require an inspection every 6 months, checking your brake lights, turn signals, horn, and headlight alignment, for two bucks.Now I get an "inspection" every two years in California, and all they check is the smog. MAYBE they notice the tire tread, squeaky brakes, or steering when they drive it into the bay, but all they check is the smog equipment and tailpipe emissions.For all they would know, the headlights, horn, and turn signals might not work, and the car has a "speed wobble" at 45 mph. AFAIK, they don't even check EVs.
  • Not Tire shop mechanic tugging on my wheel after I complained of grinding noise didn’t catch that the ball joint was failing. Subsequently failed to prevent the catastrophic failure of the ball joint and separation of the steering knuckle from the car! I’ve never lived in a state that required annual inspection, but can’t say that having the requirement has any bearing on improving safety given my experience with mechanics…