31 August 2015

Suzuki-VW Divorce To Proceed

Relationships are based on trust. What sort of trust depends on the relationship but it has to be there for it to succeed. It seems that the relationship between VW and Suzuki - while good in theory - never worked in reality. It ended up in court and the international court has just ruled on the relationship that started in 2010 with VW taking a 19.9% holding in Suzuki. In 2011, Suzuki wanted out but VW didn't want it.

I get the idea that from early on there were issues. Getting two companies with different cultures plus existing design and engineering teams to work together is a challenge. To compromise, there must be trust that the other side will share as well. If that trust breaks down, then there cannot be a satisfactory ending. It seems mutual trust hardly got off the ground in this instance.

This seemed a good tie up. VW wants access to Asia and low cost car production techniques while Suzuki could gain from fuel efficient technologies and help in growing in mature markets. However, both sides had to 'play ball' to gain trust. Also, how to deal with differences in a way that smooths over - rather than agitates - was essential. It didn't happen.

So finally the international court decided that VW must sell its share in Suzuki, while they must compensate VW for a breach of agreement. Both sides will be happy to have it out of the way and be able to move forward. Suzuki will now be free to pursue co-operation with other car makers which it needs to do.

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