German carmaker Volkswagen said Japanese partner Suzuki had violated their near two-year old partnership and gave it weeks time to fix the situation, marking a new low in relations between the two. VW said on Sunday a deal by Suzuki to source diesel engines from Italian group Fiat was a contractual breach.
"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," it said. A VW spokeswoman said this "does not mean the end of the partnership" and it was still very much interested in continuing the alliance. "We will have to see now how Suzuki reacts and then we will discuss the next steps to be taken."
VW did not intend to either sell or reduce its 19.9 percent stake in Suzuki it bought in December 2009 for 1.7 billion euros ($2.3 billion) as part of a strategic partnership with the maker of the Jimmy and Grand Vitara, the spokeswoman said.
Suzuki stuck with long-time engine partner Fiat late in June when picking it to supply its Hungarian-built SX4 crossover with a 1.6 litre diesel engine.
Suzuki has been buying 2.0-litre diesel engines from Fiat Powertrain Technologies since 2006 for the SX4, manufactured in Esztergom together with the Fiat Sedici, which shares the same underpinnings.
Suzuki chief executive Osamu Suzuki first signalled his unhappiness over the deal in a July 1 blog in Japan's leading business daily, Nikkei.
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