Suzuki sends VW ultimatum: hybrid technology or split image

Suzuki Motor Corporation (“Suzuki”) has today served Volkswagen AG (“VW”) with a ‘notice of breach’ in relation to the companies’ 9 December 2009 Framework Agreement.

The Japanese carmaker is seeking “remedies” from Volkswagen or a return of its shares.

Japan’s Suzuki has served VW with a notice of breach of contract, demanding the German company give it access to key technologies within weeks.

Suzuki’s Chairman and CEO, Osamu Suzuki, said today, “This capital alliance was intended to facilitate Suzuki’s access to VW’s core technologies. I remain disappointed that we have not received what we were promised.

If Volkswagen will not allow access it must return Suzuki’s shares. We are very encouraged by Suzuki’s consistently solid performance. We remain on track for profitability and are excited about the potential for future growth.”

However, Volkswagen today said the company has no plans to dissolve its alliance with the Japanese carmaker.

Suzuki’s board of directors decided last month to dissolve the alliance. In response, Volkswagen said it has no plans to sell its stake in Suzuki.

Volkswagen bought its 19.9% stake in Suzuki for 1.7bn Euros ($2.3bn; £1.4bn) in December 2009.

For the Germans, the partnership was supposed to be a way for Volkswagen to gain access to the Indian market for small cars, through Suzuki’s leading position in the country.