Suzuki sends Volkswagen notice of agreement breach

Hmmm treated like a subsidiary. Well Suzuki, you are kind of small. Volkswagen is a huge automaker / major player in the industry. The whole thing stinks. IMO I don't think Volkswagen needs Suzuki as much as Suzuki needs Volkswagen. Of course, Western markets are hip to the Japanese game of stealing technology then dumping later on. Suzuki which is years behind Toyota and Honda is hurting for the technology.

It's just coincidence but I was at a Suzuki dealership only days ago. Suzuki will introduce it's new flagship vehicle in December of this year. The new 2012 Suzuki Swift Sport. Now if you haven't seen it you should Copy and Paste. The world saw it for the first time at the Frankfurt Motor Show. A 3 Door-Compact Sports Coupe, with a 6-Speed Manual Transmission and improved rear suspension. A limited turbo version coming later in the year.

This car is awesome. Suzuki will do well with this vehicle. Volkswagen had better get their new stepchild under control cause that new Swift Sport is going to rake in sales that would otherwise go to MINI Coopers and Audi RS1s that are way overpriced.

Suzuki, you don't need to go hybrid. There are drivers out there that still want to have fun. The Swift Sport is the answer.

The Golf GTi is all over the hot hatch market. Suzuki needs to go green cause the shrinking Japanese market won't sustain it. Japanese companies, the smart ones, are making in roads into China and India. The lack of diesel cars in Japan is not a good thing for the Japanese car makers.

Volkswagen needs Suzuki more than Suzuki needs Volkswagen in the emerging markets like India in which Suzuki holds the dominant market share. Don't underestimate Suzuki's strength just because of it's size.

The Manesar conflict at MSI, although it's about the relevance of trade unions might carry a determining factor that might influence VW future plans and its Asia-Pacific strategy. At this moment VW is seemingly not in the good mood of either providing Suzuki with their own advanced technology or generously reimbursing Suzuki with their 20% shareholding.

Meanwhile, VW already has a tool to conduct a violent and hostile takeover, where Suzuki could find themselves in an uncomfortable situation where they need to understand that Volkswagen is a much stronger global player than Suzuki and Osamu Suzuki with his typical small minded, small one-man dominated company mentality is a walking dead man when he tries to play his usual power game with the stronger.

The lots of muscle flexing and power games with the poor and the weak ones took a toll on his common sense and his capability of making sound judgments as he foolishly thought he can rob VW of their advanced technology at the snap of his finger.

It's all upon VW now whether they make a decision to make this play for Suzuki a very serious game. Totally unpredictable what will happen.

So far Suzuki has been pretty successful worldwide for a 'typical small minded, small one-man dominated company mentality'. But some people have a habit of making up their mind before knowing the facts. If VW wish to do a hostile take over they will have to lay their hands on a lot more shares. Without knowing the exact terms of the agreement between Suzuki and VW it's hard to predict how the conflict will end.

presto345Oct. 15, 2011 - 11:15AM JST

That's why I wrote "Totally unpredictable what will happen."

Hrm, that is only the automaker division of Suzuki, they do way more than just Cars & Bikes. As do most major japanese companies. Ever had a "Three diamond" can of Tuna(aka Mitsubishi, yup tuna from japan and counted in the nations total consumption).

Quite likely you are also wearing clothing made by a company owned by Mitsubishi, etc. Just look into who owns 3M products, etc. Truly an eye-opener as most of the companies we know and accept are no longer owned by a company/country we think it does.

Ex,: Kraft is a now company from a previously Yugoslavian country. Red Bull is 50% percent owned by an Austrian and 50% by a Thai national. PEZ, etc is an Austrian company.

NetNinja: Copy and Paste

just like Renault has been doing with regard to Nissan-developed electric vehicles ?

if Suzuki is such a tiny crap, why is the mammoth VW obsessed with it so much ?

if Suzuki is such a tiny crap, why is the mammoth VW obsessed with it so much ?

VW wants access to the India small car market. And they're not about to trade technology as purportedly promised.

Rarara Oh please don't misunderstand me. I just went to the dealership a few days ago. I have the Suzuki Swift pamphlet right in front of me. I'm actually considering the 2012 Swift Sport as my next car. I talked about Ford a few months back and I'm still interested but Suzuki has caught my eye.

I know they make a great car. I read my own post again. I had a lot of positive things to say about Suzuki.

I'm certainly not interested in Volkswagen.

Big car maker abusing small car maker. It's far more likely than being the other way around.

I don´t understand how Suzuki can "demand" that VW sells its shares. When I buy stocks in a company, they are dam well mine and nobody can demand that I do anything. What am I missing?

WilliBOct. 15, 2011 - 01:30PM JST

Suzuki sold 20% of its shares in a value of 1.7 billion euros to VW. Suzuki immediately wanted the whole VW advanced technology and as they couldn't put their hans on VW as they imagined, they broke the agreement with VW -the same way they breached their agreement with MSI and their workers - and started purchasing diesel engines from FIAT in Italy causing loss and damage to VW. They were the first to violate their own agreement as usual.

This was done to blackmail and threaten VW into providing Suzuki with advanced technologies or otherwise they don't buy VW diesel engines for their cars.

VW had enough of Suzuki dirty business manner and responded to the blackmail by cutting Suzuki off their technology. Now, Suzuki grew violent as usual and requires VW to give up their shareholding and pay them back the 20% of its shares in a value of 1.7 billion euros and to get out of Suzuki eyesight unless they obey Suzuki and give them their technology.

It's a "you are our 20% shareholders , we are the bigger and stronger as you have only 20% thus you do what we say or wave your shares and pay that all back to us and get out" dictating game from as a naive, violent, childish old man imagines.

amendment

dictating game the way as a naive, violent, childish old man imagines.

The Munya Times: peraperapera

then, why does such a sperior, "advanced" VW continue to be obsessed with/stalk the "dirty", tiny Suzuki who always "breach their agreement".

If VW becomes hostile Suzuki can always initiate a Pac-man defense against VW. VW was beaten by Porsche only this time sell VW's stocks to the Chinese once finished. I bet they'll will have a feast. LoL

Suzuki can't play well with others. Seems they didn't address the Fiat engines and now want their money back. I think given the banks involved and contracts signed that won't go well for Suzuki.

rararaOct. 15, 2011 - 02:14PM JST

'Cause VW is not and chemically-pure angel descended to the earth either and they both screw one another wherever they can.

But the point is VW is possibly much better and much prepared in this power game than Suzuki and has more chances to get what they want, free access to the Japanese market. VW has already launched a powerful attack on the Indian market even in the face of other big boys of the car industry there and up till now they are doing damned good. Suzuki was naive and as always - blindly violent. What may work out for VW will not necessary work out for Suzuki. And there might be other players in the game who we don't even know as all we have the online news.

So I know it's ironical but I would describe my/our argument as something like we are discussing what we don't know.

That's why I always I say , the outcome is unpredictable.

sf2k: Suzuki can't play well with others.

then, you should advise VW to stop stalking Suzuki.

Samurai Blue:

It is VW, who has Suzuki's stock. In other words, VW paid and Suzuki wanted technology in "return".

electric2004: VW paid and Suzuki wanted technology in "return".

it sounds very unfair to VW. why does VW continue to be obsessed with and stalk Suzuki?

VW is another giant concern which will eventually become another GM. The German quality so many speak about is getting worse every year, anyone who has owned an Audi or a Mercedes in the recent years will tell you so. Suzuki has a major advantage in the Indian market as it has brand recognition, their profit numbers are fine too. For the european market, Suzuki is extremely underrated but it's bound to change at some point.

@electric2004

Pac-man defense is a method of defense in buying out the company that is trying to take over, so in this case if VW starts buying out stocks of Suzuki, Suzuki starts buying out VW stocks in return.

sumgaiOct. 15, 2011 - 03:55PM JST

Suzuki's own technology for small cars (and may be quality) was admired once and countries/makers were keen on acquiring Suzuki's technology the same way as Suzuki is after VW's technology now and Suzuki shut the door to everybody the same way VW shuts the door to Suzuki now.

The quality of the European cars are getting worse as you wrote, but it neither helps or gives Suzuki better way to go - as Suzuki's own technology is getting insufficient in these days that's why they are trying to get VW's technology - on the contrary it creates more difficulties for Suzuki as it sharpens the competition.

It's VW which keeps stalking Suzuki, and not the other way around.

rarara:

You keep talking about VW "stalking" Suzuki, but what exactly do you mean by that? They bought some Suzuki shares. Everybody can do that. You can. I can. What does have have to do with stalking?

WilliB: They bought some Suzuki shares. Everybody can do that. You can. I can.

so, VW continues to hold Suzuki shares and considers buying even more from a pure investment standpoint ? It's simply a belief in the very bright future of Suzuki, and has nothing to do with VW's obsession with little Suzuki ? then, it's good.

rararaOct. 15, 2011 - 05:25PM JST

So, VW continues to hold Suzuki shares and considers buying even more from a pure investment standpoint ?

Fat chance since they are both competing within the same market especially when their products overlaps one another meaning if one products sells the other does not meaning you will lose money whichever the market chooses.

It would seem The Munya Times has inside information about the contract between VW and Suzuki and spices his/her opinions with juicy adverbs. But to cover his/her tracks repeats the phrase 'That's why I always I say , the outcome is unpredictable.'

A famous reporter once said, Quote: The irony of the Information Age is that it has given new respectability to uninformed opinion. Unquote.

With all due respect I would be interested in knowing the sources forming the core of TMT's assertions, concerning VW's and Suzuki's small car technology and success in their inroads in world markets. Suzuki's 'insufficient' technology, Suzuki being naive and blindly violent (??), Suzuki and VW shutting doors, offensive remarks directed at Osamu Suzuki, blackmailing and threatening VW (give me a break), Suzuki's dirty business manner (tut-tut), agreement violations, and . . . Wow, some story, some fiction.

Believing in a cause is one thing, writing pure nonsense another. Please substantiate your assertions or indicate that everything is a deduction from your own personal observations or biases.

@Samurai Blue:

The comparison with Porsche is wrong. Porsche tried a hostile takeover of Volkswagen - and failed, ending up as part of the Volkswagen group. Mess with the big guys if and only if your're properly prepared.

For my part, I rarely hear about the quality of european cars becoming much worse. They cannot compete with the prices in small cars - that is the main reason why they wanted to cooperate with Suzuki. In the Indian market, quality is less important than the price - in that respect Volkswagen has something to learn form Suzuki.

On the other hand, if it comes down to resilient technology or power efficient motors - well that's what Suzuki expected from the deal. However, these things are traded only between the companies that are really part of the family - 100%, not 20%.

BTW, Volkswagen is not losing anything by holding the Suzuki stocks. They can profit this way from Suzuki's strength in the Indian market. In the meantime, they concentrate on their speciality - sturdy cars which easily last for a decade.

On the other hand, if it comes down to resilient technology or power efficient motors - well that's what Suzuki expected from the deal. However, these things are traded only between the companies that are really part of the family - 100%, not 20%.

If, and only if, the terms of the agreement were 1) for VW to get access to the Indian market through the Suzuki network, and 2) get the know-how on producing and distributing small vehicles on the Indian continent, and 3) for Suzuki to get access to specified or unspecified technology and/or parts from VW, like diesel engines - and then VW withholding their know-how and not supplying engines, there would be a breach of contract on the side of the powerful but crafty VW group.

The big guys always win? Wrong. VW denied Suzuki requested their engines? Probably true. VW denied the request for engines? True. VW were not about to supply a 20% partner with their fiercely protected technology while their partner were certainly not ready to offer their marketing and production know-how on an unequal basis. And don't get excited, this is all my personal opinion.

If Suzuki wanted electric motors/hybrid technology they would had been better off hooking up with companies like Hitachi, Kawasaki Heavy Industry and/or Mitsubishi Heavy with all the knowledge that those respective companies picked up developing electric trains. They could also have turned to Panasonic as well since they have more expertise in electric than VW. Another possibility is a fan jet-electric motor combination in which a miniature fan jet generates electricity and stores it on batteries in which powers an electric motor. Many boats utilizes this method and is much more fuel efficient than any internal combustion engines on market whether it be gasoline or diesel. At the end we are witnessing the last gasping moments of the internal combustion powered cars for the mass market.

presto345Oct. 15, 2011 - 07:35PM JST

Then in case of you having a different opinion or information you might as well let us know the truth by commenting the news instead of criticizing other posters' comment my dear genius friend, as your post of the above doesn't make you look any smarter.

Now, please go reveal the truth, and also, please consider that the charm of this discussion board is that any posters can post their own opinion and the hundreds or thousands of readers are adults enough to decide to whom to believe without a poster trying to devaluate a fellow posters' comment.

@SamuraiBlueOct. 15, 2011 - 08:45PM JST

An absolutely valid point and question as of why Suzuki turned on to VW and - It"S MEOct. 15, 2011 - 11:27AM JST - post might be a partial answer for that as Suzuki itself was/is engaged with other business activities silently in the background in Europe and can have and possibly has other important business interests in Europe that can explain why they wish to be present In Europe or have business ties there.

The Munya Times and others

They had an agreement in writing to share technologies, the basis on which VW could acquire the stake. VW didn't comply. The thing about Suzuki using Fiat's tech to their advantage is really no concern of VW. To reiterate, VW didn't simply buy a part of Suzuki but also agreed to share technology - in a contractual form.

sumgaiOct. 16, 2011 - 12:11AM JST

That's correct, but VW used Suzuki's buying Fiat diesel engines as a pretext to kick off the agreement on their side too and stopped providing technologies. It's still unclear why Suzuki started importing and building the fiat diesel engines in their cars at first place and whether it really violated the agreement or not. That's how it started. Much information needed if you think it's incorrect, I personally inclined to accept VW statement as it is based on facts. Should you have more trustful information, please let us know.

Moreover, some things are not absolutely clear about VW either, that's why I posted --- The Munya TimesOct. 15, 2011 - 02:41PM JST

I think Suzuki also made a huge mistake not reacting firmly immediately when VW stopped talking to them after the Fiat issue and VW was only sending messages through the press to Suzuki. Should he have done it and cleared the situation right then, VW wouldn't have gone that far and everything could be much clearer now.

Suzuki preference for fiat diesels shows arrogance and violent behaviour. It is a well known fact that Volkswagen's TDI technology is the market leader by a large margin.

who is this tiny "dirty", "violent", "childish" Suzuki, who "always breach their agreements" and yet continues to be stalked by a sperior, "advanced" VW, The Munya Times, etc ?

@The Munya Times

Very detailed 'insider' story indeed. Thank you

Like most posters, have learnt the first time about Mr. Osamu Suzuki & his management style as per your descriptions..there is one common point between the 2 companies -- VW is the leader on the Chinese market whereas Suzuki in India ( Maruti ) -- emerging markets having the highest growth potential..hence, sounds like the 2 partners are primarily eyeing at taking advantage of each other's strength in the respective emerging market because..hybrid technologies are dominated by Japanese auto makers ( Toyota, Honda etc ) that were the early birds in this field -- appears to me not so convincing of reaching out to VW by selling 1/5 of own company's stake for this technology -- better off trying out chance at home with Toyota ?

By the way, what Mr. Osamu Suzuki did wrong in India as the frequency of strikes appeared surprisingly high ? Any insight the munya times ?

Suzuki preference for fiat diesels shows arrogance and violent behaviour.It is a well known fact that Volkswagen's TDI technology is the market leader by a large margin.

It's hard to tell what would happen in this legal debate if they drag each others to the court, how the lawyers will act and whether the EU or the Japanese law will be applied, but according to the Japanese law if the agreement contains any clause that is either against the law or can be discussed or just none of the contracting partners can be forced to do so, that clause as well as the accusation can be annulled

In this case, although the contracting sides agreed i.e. VW promised that VW will provide Suzuki with VW's advanced technology in return of Suzuki allowing VW buying Suzuki shares, if according to the law the shareholder is basically not obliged to do so, or according to the law no such precondition can be set in order to allow a third party to buy shares or any of the sides states that he was forced to accept such a precondition or Suzuki set unrealistic preconditions such as arrogantly extorted VW to make such a promise, well, if this case in the hand of a superior lawyer team this clause of the agreement can be attacked even before the Japanese court. I.E. If a shareholder is not obliged by the law to provide technologies or anything else in return to be allowed to hold shares than this clause can be discussed or annulled.

Suzuki is frightfully arrogant and is always at odds with the law, power seeking and always have problems with the law e.g. and when they went to India and Hungary to build factories there they immediately were seeking for negotiation with the highest political and government circles to push through their very own written agreement and to place it above the local law. That's why among others they have legal issues with MSI now concerning to the union problem as they simply trying to ban even the union or decide what union they can have. Suzuki always applies its very own arrogant, demanding rule and wants everybody to play by their law at their will.

PT24881Oct. 16, 2011 - 11:00AM JST

No insight but I have been following Suzuki news in the press just out of curiosity and they give report about him very often.

sounds like the 2 partners are primarily eyeing at taking advantage of each other's strength

Exactly. Although, I think I have never seen anybody begin that arrogant as Osamu Suzuiki, basically I wouldn't worry about any of them Suzuki or VW.

By the way, what Mr. Osamu Suzuki did wrong in India as the frequency of strikes appeared surprisingly high ? Any insight the munya times ?

Needs no insight, just read the news, they do the same in their industrial establishments in India and Hungary, unpayed overtime working, harsh conditions, if the trade union members or anybody else tries to do something they will be sacked, etc. it's all in the news. If you wish to know more you should visit MSI trade union sites and forums, it goes on in English language. I don't know whether Hungarians have a union site for the Suzuki issues or not.

@PT24881 Here are some useful links if you wish to know more

http://www.handelsblatt.com/unternehmen/industrie/suzuki-tritt-gegen-volkswagen-nach/4676458.html http://www.morgenpost.de/wirtschaft/article1761133/Suzuki-und-VW-beenden-Partnerschaft.html

It tells about how Suzuki violated the agreement with Fiat diesels.

Also very interesting

http://www.maerkischeallgemeine.de/cms/beitrag/12195384/5934832/UPDATE-Streit-zwischen-Suzuki-und-Volkswagen-gewinnt-an.html

Suzuki has many similar legal problems in Hungary that concerns him, that might be why he inadvertently mentions the Hungarian Suzuki (says magar) Suzuki instead of India at 1:03 or so and immediately corrects himself.

http://www.youtube.com/watch?v=OOxby4PxVGw

There are many more news and videos online, naturally much more than I could write down in my posts.

Reading an article from Bloomberg, I believe VW was well aware of the reliance between Fiat and Suzuki which was formed in 2005 to to make diesel engines in Asia which way before forming alliance with VW. Unless it was written within the contract that the alliance with Fiat must be terminated before alliance with VW can begin, I can't see how VW is going to win any dispute in court.

Here is the link;

http://mobile.bloomberg.com/news/2011-09-12/suzuki-denies-breaking-agreement-with-volkswagen-by-buying-fiat-engines

Basically VW wanted to use Suzuki as a foothold in expanding market share in India which they only sell 53,000 units while Suzuki sells 1.1 million in that country.

@The Munya Times

Good insight with links. Will check that out. Thanks again !