Suzuki and Volkswagen dispute ends with settlement; international court of arbitration orders termination of business relation between two parties
The long-standing saga between Volkswagen and Suzuki has come to an end with the Japanese manufacturer affirming that a settlement has finally been attained. Back in November 2011, Suzuki Motor Corporation released a statement that due to Volkswagen Group’s reluctance to sell the 19.9 per cent of its shares back; it’s taking the German company to an international court of arbitration in London. The dispute was to oblige Volkswagen AG to dispose Suzuki’s stakes held by the German brand.
Their altercation started a year back when Volkswagen AG described Suzuki as its associate outfit and it further infuriated when VW accused Suzuki of buying diesel engines from Fiat Group instead of using its own manufactured power units by breaching a contract. The public fall out between the two companies has led to the arbitrators forcing Volkswagen Group to end the financial relationship as a whole.
The stakes were originally bought in 2010 for 222.5 billion yen which equates to a current value of nearly 500 million yen(estimated at $ 4 billion). The deal struck in 2009 was initially planned to create a synergy between the two brands by investing on fuel-efficient low displacing engines for growing countries. This would have allowed Suzuki to get access to the technology in developing the engines and in return Suzuki would provide a substantial persona for Volkswagen in the Indian market.
As the Suzuki Motor Corporation had decided to go with Fiat-sourced engine for our domestic market, Volkswagen had certainly been exasperated. The damage claims pitted against Suzuki didn’t justify the international court of arbitration and therefore concluded the VW should sell back the shares with a six month settlement period given as duration.
Despite no official statements on the settlement have been released, Suzuki Motor Corporation divulged that it won’t hurt its earnings and speculations are that the major revamp in the board-room of Volkswagen AG because of the ongoing defeat device scandal resulted in termination of case sooner than expected. However, court has given permission for Volkswagen to proceed with the damage claims accused against Suzuki for violating the engine deal.
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