TOKYO (AP) — Suzuki Motor Corp. said Monday it will abort
its alliance with Volkswagen AG, ending a nearly two-year marriage that
never worked and eventually escalated into a public feud.
Suzuki’s
board of directors decided to dissolve its partnership and
cross-shareholding relationship with the German automaker because of
concerns that it would lose autonomy, it said in a statement. Volkswagen
owns a nearly 20 percent stake in Suzuki, while Suzuki holds about 1.5
percent of Volkswagen.
Suzuki said it will ask Volkswagen to
unload its Suzuki shares, which it will buy back with its own financing,
and that it would do the same with its Volkswagen shares if the two
reach agreement.
Osamu Suzuki, Suzuki’s chairman, said the deal,
signed in December 2009, had been aimed at accelerating Suzuki’s
development of ecological vehicles, such as hybrids, electric cars and
fuel cells.
But no such project was in the works nearly two years
later, and the deal was turning out only negative for Suzuki, taking up
time and limiting its operations, he said.
"It is like being
married and getting a divorce. Instead of criticizing each other, it is
better to go through it with a smile," he said at a hastily called news
conference at a Tokyo hall.
He shrugged off questions that the
talks to end the partnership may not go smoothly, and said he was
confident Volkswagen would also be eager to do the same.
The
automakers announced a promising partnership in 2009, establishing one
of the world’s biggest auto alliances. They said they would work
together on product development, production and sales, with a focus on
hybrid and electric cars.
Suzuki, which specializes in tiny cars
called "kei" or minicars in Japan and other parts of Asia, was widely
viewed as needing the prowess of a bigger Volkswagen to ride out the
intensifying global competition as the industry moves increasingly to
green cars.
But speculation had been growing that the tie-up with Volkswagen wasn’t going well because Suzuki began
complaining in public.
The
partnership with Volkswagen came after Suzuki lost its alliance with
General Motors Co., which began in 1981. GM sold a 17 percent stake in
Suzuki in 2006, and its remaining 3 percent stake in 2009.
And so
Suzuki had hoped to gain access to new technology to stay competitive
through forging a new partnership with Volkswagen. For Volkswagen, the
alliance represented an opportunity to boost its footprint in emerging
markets.
Suzuki holds nearly half the market share in India, while Volkswagen is strong in China, as well as South
America and Europe.
But the two companies could not agree on projects or how the partnership would function on the ground.

Their
relationship took a bad turn in March, when Volkswagen in its annual
report described Suzuki as a "company over which Volkswagen AG has
significant influence on financial and operating policy decisions."
Suzuki
cited the comment in Monday’s statement. It expressed fears of a
"negative impact on Suzuki’s autonomous decision-making in its operating
policy."
It also said it could never gained the sort of access it wanted to Volkswagen’s technology.
The frustration appears to be mutual.
Last
week, Volkswagen accused Suzuki of violating the terms of its
partnership by deciding to buy diesel engines from rival Fiat SpA. It
gave Suzuki several weeks to address the issue.
Suzuki declined to say if any other partnerships were in the works.
"Even
if we put everything into writing, if there is no heart-to-heart
connection, then it doesn’t work," Suzuki said, adding he had learned a
lot by working with Volkswagen.
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Yuri Kageyama in Tokyo contributed to this report.
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Copyright 2011 The Associated Press.