Suzuki to seek arbitration to cut ties with Volkswagen

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Japan's Suzuki Motor said Friday it will seek arbitration to terminate its alliance with Volkswagen if the German auto giant refuses to sell its stake in the Japanese carmaker by November 2012.

In the latest step in the bitter fight by Suzuki to sever their increasingly soured alliance, the small-car maker said it told Volkswagen to scrap the deal and sell its shareholding to Suzuki or a party designated by Suzuki.

"If Volkswagen AG does not process our stocks to us or a third-party designated by us, we will seek arbitration," Suzuki said in a statement.

But Volkswagen, which has repeatedly refused to accept similar demands in the past, told Dow Jones Newswires that the company planned to keep its roughly 20 percent stake.

The two firms formed a 1.7 billion euro ($2.3 billion) tie-up in 2009.

Suzuki planned to seek support from Volkswagen in hybrid technologies and other eco-friendly areas, while the German firm hoped to jointly develop small cars for emerging markets by taking advantage of Suzuki's know-how.

But they made little progress and halted their joint projects.

The Japanese automaker in September said it wanted to end the alliance, citing a deep disagreement over collaboration and complained that its partner failed to provide promised access to technologies.

Ahead of Suzuki's move towards ending the tie-up, relations had become frayed as Volkswagen served notice of an alleged infringement relating to the supply of diesel engines to Suzuki from Italian carmaker Fiat.

© 2011 AFP

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