Alliance in distress: Volkswagen and Suzuki image

The arbitration decision is inching closer to reality and recently revealed internal documentations now showcase how a once promising alliance crumbled to ashes and resulted in major problems at least for one of the partners.

In an era where the voice of leaders such as Fiat Chrysler Automobiles chief executive officer Sergio Marchionne is prominent in pushing for auto industry consolidation, the tale of lost love between Germany’s Volkswagen AG and Japan’s Suzuki is as cautionary as it gets. Common wisdom said both players would benefit from their alliance – the smaller Japanese peer nailing next-generation fuel-efficient powertrain technology access and more markets while Volkswagen could be assisted in taking the Indian road and also taught how to develop and build affordable autos. But the partnership crumbled in just two years and without ever producing anything tangible.

Now both parties are eagerly awaiting the result of protracted arbitration that should end a bitter feud that has been going on for almost four years. The ICC International Court of Arbitration in London, which started the proceeds on the matter back in November 2011 is now ready to deliver the decision. And the toll has been high on both parties. Suzuki has stalled its development and only now investors are starting to warm up to the small Japanese automaker as they expect the conclusion of the partnership and see it growing in India. And Volkswagen has gone through a leadership crisis this year – also because of its inability to deliver lower cost manufacturing and affordable models, key to emerging markets.

Via Automotive News Europe