Suzuki cuts ties with Volkswagen

TOKYO: Japan's Suzuki Motor said on Friday it had ended its alliance with Volkswagen and demanded the German auto giant sell back its stake in the Japanese carmaker by November 2012.

The company said it would seek arbitration if Volkswagen refused to sell the 112.21 million shares, or 19.89 percent of Suzuki, to the Japanese small-car maker or a third party it designates.

"Today Suzuki terminated the partnership with VW," Suzuki chairman and CEO Osamu Suzuki said in a statement. "Suzuki will be seeking the return of its shares from VW in arbitration."

"I am disappointed that we have to take this action but VW's actions have left us with no choice."The company said that it notified VW of the termination of the capital alliance as its board approved the action Friday.

But Volkswagen, which has repeatedly refused to accept similar demands in the past, told Dow Jones Newswires that the company planned to keep its roughly 20 percent stake.

The two firms formed a 1.7 billion euro ($2.3 billion) tie-up in 2009. Suzuki planned to seek support from Volkswagen in hybrid technologies and other eco-friendly areas, while the German firm hoped to jointly develop small cars for emerging markets by taking advantage of Suzuki's know-how.

But they made little progress and halted their joint projects. The Japanese automaker in September said it wanted to end the alliance, citing a deep disagreement over collaboration and complained that its partner failed to provide promised access to technologies.

CEO Suzuki said VW chairman Martin Winterkorn "has not honoured his commitment to grant Suzuki access to what was originally agreed."

"In the absence of VW's cooperation and given its failure to do what was agreed, there is no basis for the partnership to continue," the CEO said.

Ahead of Suzuki's move towards ending the tie-up, relations had become frayed as Volkswagen served notice of an alleged infringement relating to the supply of diesel engines to Suzuki from Italian carmaker Fiat.

"We will now work to restore the relationship between Suzuki and VW to its original state as independent parties who do not restrict each other's business," Suzuki said.