Suzuki Says Four-Year Effort to End VW Pact Is Coming to an End

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Suzuki Motor Corp.’s four-year effort to end a failed partnership with Volkswagen AG is reaching an end, though the outcome remains uncertain.

Arbitration proceedings on the Japanese carmaker’s effort to force VW to sell back a 19.9 percent stake have been concluded, and the companies are now awaiting the ruling, Suzuki President Osamu Suzuki told investors on Friday.

“We are embarrassed by the fact that the arbitration took such a long time,” he said at the annual shareholders meeting in Hamamatsu, where the manufacturer is based. “We will disclose the conclusion as soon as it comes out.”

Volkswagen and Suzuki have been in arbitration since November 2011 following the breakdown of a deal brokered in 2009 by Osamu Suzuki and Ferdinand Piech, VW’s former chairman. Each side accused the other of breaching the agreement. Relations soured after Suzuki agreed in June 2011 to purchase engines from Fiat Chrysler Automobiles NV’s predecessor.

Suzuki rose 2.1 percent to 4,208 yen at the close in Tokyo. The stock has gained 16 percent this year. Volkswagen shares declined as much as 1.4 percent in Frankfurt.

Even though the carmakers were at odds, VW was unwilling to sell its stake in Suzuki, which is India’s largest carmaker through its Maruti Suzuki unit. That limited the Japanese company’s options to deepen cooperation with Fiat or other carmakers. Even now, there’s no guarantee that Suzuki will be able to end its ties to Volkswagen.

Budget Cars

While there’s the possibility that the arbitrators will grant Suzuki’s wish to gain back the stock from VW, “it could be that the two companies resume working together,” said Frank Biller, a Stuttgart, Germany-based analyst at LBBW. “For Volkswagen, it would make sense to run a joint project that could see it sell budget cars in Asia.”

Since the breakdown of the cooperation with Suzuki, VW has been developing an entry-level car for China on its own, but has yet to finalize a vehicle after years of work. Eric Felber, a spokesman at Wolfsburg, Germany-based VW, declined to comment on Suzuki’s remarks Friday.

VW is Suzuki’s biggest investor following the early 2010 purchase of the stake for 1.7 billion euros ($1.9 billion). Suzuki bought 770 million euros of VW stock, and currently holds about 1.5 percent of the German company’s common shares, according to data compiled by Bloomberg.

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