Volkswagen and Suzuki Await Arbitration Ruling After Alliance Collapse
A failed partnership between Volkswagen and Suzuki heads for a decision in London after four years of dispute, with development and emerging-market ambitions stalled on both sides.
Volkswagen AG and Suzuki Motor Corporation are approaching the end of a four-year legal battle, with the International Court of Arbitration in London set to rule on the fallout from their failed alliance. The partnership, announced in late 2009, was intended to combine Volkswagen’s global reach and technology with Suzuki’s small-car expertise and access to the Indian market. Instead, it collapsed within two years, leaving both sides frustrated and no joint products to show for the effort.
The original deal saw Volkswagen take a 19.9 percent stake in Suzuki, hoping to leverage the Japanese firm’s position in India and learn from its approach to affordable cars. Suzuki, in turn, sought access to next-generation fuel-efficient powertrains and broader international markets. The reality was a mismatch of corporate cultures and priorities. Suzuki accused Volkswagen of trying to exert too much control, while Volkswagen was frustrated by Suzuki’s independent approach and its decision to source diesel engines from Fiat, not Wolfsburg.
Arbitration and business consequences
Arbitration began in November 2011, with both companies seeking to end the alliance on their own terms. Suzuki demanded the return of its shares, while Volkswagen resisted, citing a breach of contract. The dispute has dragged on, freezing cooperation and creating uncertainty for both firms. Suzuki’s product development slowed, and investors only began to regain confidence as the arbitration process neared its conclusion. For Volkswagen, the breakdown came as it struggled to produce low-cost models for emerging markets and faced internal leadership turmoil.
