VW's Global Grand Plan Takes a Hit

Nobody said it would be easy getting to No. 1. Volkswagen is finding that out first hand as its alliance with Suzuki implodes amid finger pointing and allegations between the two automakers. And to think, not long ago many people thought this was the type of deal that would be a win/win for both companies. Now it's looking like a lost cause. For its part, VW has said it would like the alliance to continue. Don't expect that to happen.

2012 Volkswagen Beetle
Source: vw.com
2012 Volkswagen Beetle

So what happened?

On the eve of the Frankfurt Auto Show, Suzuki has said it wants to end the two year alliance with Volkswagen. The Japanese automaker wants to buy back VW's 19.9 percent stake in Suzuki while dumping it's 1.5 percent stake in Volkswagen, in large part because it's fed up with the fact these two companies are not on the same page. The comments coming out of Japan in recent months made it clear Suzuki has not felt like an equal partner. Suzuki has complained it gets the feeling Volkswagen is trying to control the Japanese auto maker. Meanwhile, Volkswagen is ticked off Suzuki is sourcing diesel engines from Italian auto maker Fiat. Seems VW doesn't like the idea of Suzuki having other dance partners.

As a result, VW's plan to get greater exposure in India and Southeast Asia have been dealt a blow. That region of the world is critical to Volkswagen's broader plan of becoming No. 1 in global auto sales. Doesn't mean the German automaker can't eventually overtake Toyota and GM to get to the top spot, but having a well thought out alliance with Suzuki would have made it easier. But the more we hear about this alliance, the more it's clear the partnership wasn't going to work. There are no projects in process that would complicate a split.

Yes, it's true alliances and partnerships between major auto makers in different parts of the world have rarely paid off. With the exception of the Nissan /Renault partnership, most alliances have failed. Unfortunately for Volkswagen, this deal is the latest example.

2010 Global Sales

2010 Global Sales

Care Make
Sales
Toyota 8.42 Million
GM 8.39 Million
VW 7.14 Million
Nissan/Renault 6.7 Million
Hyundai/Kia 5.74 Million
Ford 5.31 Million