VW-Suzuki separation a corner away; Fiat interested in Suzuki

The VW-Suzuki Alliance is in the news lately for all the wrong reasons. VW drew the first blood by publicly announcing that Suzuki needs a lesson or two in co-operation. The Suzuki boss responded with a blog post  mentioning that VW is not treating Suzuki as a partner but rather as a slave. Now the acrimony has reached its peak.

VW has presented a legal notice to Suzuki because it is not happy with the fact that the Japanese Czar is procuring diesel engines (Multi-jet) from Fiat. Suzuki had partnered with Fiat to produce diesel engines in Asia in 2005. Recently, they decided that VW diesel mills are not a perfect match for their products and extended their agreement with Fiat.

The VW-Suzuki Alliance has been futile since it was first struck. There were many plans of combining Suzuki’s stronghold in the emerging markets with VW’s global reach. The partnership was supposed to extend to hybrids and diesels as well. However, no concrete outcome has been seen till date.

Later, Suzuki was given a period of several weeks to remedy the infringement. However, Suzuki opted to end its alliance with Volkswagen at an unscheduled board meeting saying that it will sell its shares in Volkswagen if the German automaker complied with the arrangement. Please note that no action has taken place yet but now it’s only a matter of time.

Now in an interesting development, Fiat CEO Sergio Marchionne told Reuters that ‘Suzuki would be an interesting partner for Fiat in Asia’. This doesn’t not shock us because we have already speculated that Fiat was right partner for Suzuki and not VW.

There are a lot of synergies between the two companies that both can leverage. Adding to that, Suzuki and Fiat have been working together on various projects for a very long time. So both of them are well versed with the business methods.

Do you think Fiat-Suzuki will work better than VW-Suzuki? How will such a partnership help the ailing Fiat in India?