Suzuki Sues For Divorce

Bertel Schmitt
by Bertel Schmitt

Suzuki has made good on its repeated threats to sue Volkswagen. The Japanese carmaker initiated arbitration procedures. This according to Reuters, The Nikkei [sub], and sundry other media that has been covering the domestic dispute between the couple. Suzuki originally had given Volkswagen some time to consider and was planning for a repurchase of the 19.9 percent Suzuki shares held by Volkswagen. After Volkswagen CEO Martin Winterkorn denied the offer out of hand, and implicitly said that he was waiting for Osamu Suzuki to be replaced by younger blood, Suzuki said “mo takusan desu” (enough is enough) and filed papers with the International Chamber of Commerce International Court of Arbitration in London. Don’t expect a quick end of the drama.

Yasuhito Harayama, Suzuki’s executive vice president, and widely suspected as the driving force behind the divorce proceedings, had said last Friday that it might take up to two years to settle the dispute.

Volkswagen told The Nikkei [sub] that “it can’t follow the logic behind Suzuki Motor Corp.’s move to commence arbitration proceedings aimed at compelling Volkswagen to dispose of its shares in Suzuki.” Volkswagen probably used “nicht nachvollziehbar” (incomprehensible), which is a politically correct way of saying that the other side lost its marbles.

Join the conversation
  • Robert.Walter Robert.Walter on Nov 24, 2011

    It occurs to me again, that all the hullabaloo over no tech transfer from WOB to Jpn, engine sourcing from Jpn to Fiat, "Associate" or not, and biological solutions are both sideshow to and confirming reasons for Suzuki's behavior, but that the real reason for the actions on the part of Suzuki is recognition of a strategic mistake that has left a relatively cash flush VW with a sizable share and the first step toward takeover. It is this clarity on what may have been necessary, or even desirable, during the crisis is no longer so, and this loss of independence and VW's win-win positioning is why Suzuki is throwing a hail Mary arbitration pass in hopes of compelling VW to divest, go away, and sin no more (and possibly reset the merger clock so S can reopen the process to other bidders.)

    • Th009 Th009 on Nov 24, 2011

      This could actually explain the whole soap opera: the deal with Fiat, the uproar over "associate", the angry blogging etc. Get VW to throw in the towel and back out of the alliance. But the original strategic mistake may have been followed by a second one, as it doesn't look like Suzuki expected VW to hang on to those shares. Hence the last shot using arbitration, as you say. Ferdinand Piech should not be underestimated as an adversary ...

  • Unhittable curveball Unhittable curveball on Nov 24, 2011

    Actually, the VW-Suzuki alliance contract specified that VW cannot increase its stake in Suzuki beyond the 19.99% WITHOUT Suzuki's consent. The idea that VW could somehow takeover Suzuki eventually is really wishful thinking.

    • See 1 previous
    • Tedward Tedward on Nov 24, 2011

      @th009 Or they could probably just wait for Suzuki to violate the contract, which would free them up to gobble away. I'm not sure what that would entail, but somehow I doubt that you could operate as an international manufacturer in the same industry for long without doing so. Maybe I'm wrong on this (wild guess) and the contract is pretty permissive of competition etc... but I doubt it.

  • Lorenzo Lorenzo on Nov 24, 2011

    Well, what if Porsche bought into Suzuki before the merger with VW is complete? What if some other company held Suzuki shares and got bought out by VW? Ferdinand Piech seems a bit like J.P.Morgan, who got rid of lawyers who told him what he could and could not do under the law, and hired lawyers who could tell him how he could do what he wanted to do, legally.