Suzuki Claims Volkswagen Has Broken Contract, Takes Legal Action

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Suzuki Motor Corporation has issued a legal notice to Volkswagen Group, claiming that the German company has breached a contract for the two automakers to work in partnership.

In a statement issued last Friday, Suzuki CEO Osamu Suzuki said, “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.”

VW acknowledged Suzuki's legal action and "will not be making any changes to its shareholding in Suzuki Motor Corp," the carmaker said in a statement today.

The partnership between the two companies has been turbulent. The two first linked up in late 2009, when Volkswagen took a 19.9-percent stake in Suzuki. Under the original agreement, VW would receive help breaking into the global small-car market in emerging markets, where Suzuki has been successful. Suzuki, for its part, hoped to score VW’s hybrid and electric-car technology, as well as diesel engines and transmission technology.

So far, the companies seem to have spent more time bickering than developing products.

A month ago, Suzuki told Volkswagen that it was “tarnishing” the Japanese company’s reputation, after a VW executive said Suzuki had violated the terms of the automakers’ contract. Suzuki had purchased diesel engines from Italian automaker Fiat, rather than from Volkswagen. Suzuki executives have also publicly stated they were “disappointed” in VW’s technology lineup.

Suzuki says today’s legal notice serves as a warning that Volkswagen must rectify the situation soon and follow the guidelines set out in the automakers’ original contract. “If Volkswagen will not allow access [to technology], it must return Suzuki’s shares,” Osamu Suzuki said in a statement.

Sources: Suzuki, Autocar

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