VW Dieselgate: Suzuki Lost USD 558 millionAuto News
Volkswagen’s dieselgate scandal has just claimed its first collateral damage – Suzuki Motor Corporation, which lost USD 558 million after shares of Volkswagen AG, which Suzuki has a 1.5 percent stake in, plunged 25 percent in this week alone.
At the end of March 2015, Suzuki’s stakes in Volkswagen AG was worth 137.5 billion Yen, but by the end of last week, it was worth only 70.3 billion Yen.
Despite the poor value, Suzuki insists to go ahead with the ‘divorce’ from Volkswagen AG, with whom it partnered in 2009 before falling out two years later.
In December 2009, Volkswagen AG and Suzuki jointly announced that the two were entering a ‘long-term strategic partnership.’
Briefly, the main objective of the partnership was to allow Volkswagen to leverage on Suzuki’s expertise in compact cars and its distribution channels in India, where Suzuki’s local joint venture Maruti-Suzuki is India’s largest automotive brand. In return, Suzuki would be given access to Volkswagen’s fuel-saving advanced diesel and hybrid technology.
Less than a year later, Suzuki signed an agreement to purchase diesel engines from Fiat, which Volkswagen argued was a breach of the agreement.
Suzuki’s CEO Mr. Osamu Suzuki was also unhappy with Volkswagen listing Suzuki as an ‘associate company’ in the Group’s 2010 annual report, which in Volkswagen’s terms meant a company which Volkswagen has direct or indirect influence in.
Osamu Suzuki asserted that Suzuki is an independent company, despite having Volkswagen as a majority shareholder, while Volkswagen reasoned that its annual report is compiled in accordance to international accounting rules.
On 18-November 2011, Suzuki served a notice of termination to Volkswagen.
Earlier this month, a tribunal court in London found Suzuki to have breached the terms of its agreement with Volkswagen, and granted the rights to Volkswagen to claim damages from Suzuki.
The court also ordered Volkswagen sell back its 19.9 percent stake in Suzuki back to Suzuki.