• Bloomberg


Volkswagen AG rejected efforts by Suzuki Motor Corp. to force an end to a two-year-old partnership that hasn’t yielded a single project.

Suzuki said Friday that it terminated the cooperation agreement and demanded that VW sell back its 19.9 percent stake in the Japanese manufacturer, threatening to take the dispute to an international court for arbitration. Wolfsburg, Germany-based Volkswagen called the actions “without foundation,” reaffirming plans to retain the holding.

“The glass is broken,” said Arndt Ellinghorst, a London- based analyst with Credit Suisse. “I don’t see any reason why VW should not sell its stake back to Suzuki,” as there seems little chance of repairing the relationship.

The two companies have been at odds since VW described Suzuki as an “associate” in its 2010 annual report, published in March. Relations took a turn for the worse after Chairman Osamu Suzuki accused VW of disparaging the Hamamatsu, Shizuoka Prefecture-based company’s honor by alleging it had violated the 2009 contract by buying engines from Fiat SpA.

Each company has accused the other of breaching their cooperation agreement, which was meant to supply Suzuki with technology and provide VW with access to the Indian car market. VW’s move to back off calling Suzuki an “associate” on Oct. 27 hasn’t quelled the feud.

“In the absence of VW’s cooperation and given its failure to do what was agreed, there is no basis for the partnership to continue,” Chairman Suzuki said Friday. “We will now work to restore the relationship between Suzuki and VW to its original state as independent parties who do not restrict each other.”

Suzuki, which owns 1.49 percent of VW, last month accused VW of violating the partnership agreement by not sharing technology and sent a letter to VW asking it to remedy “numerous” breaches of the pact. VW hasn’t agreed to its requests, Suzuki said in Friday’s statement.

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