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It's official, the proposed alliance between Suzuki Motor Co. and Volkswagen AG is now dead in the water. On Sunday; VW said that the Japanese company's decision to source diesel engines from Fiat, was an infringement on the terms of the deal between it and VW.

As a result today, in Tokyo, during an unscheduled board meeting, Suzuki has decided to terminate its alliance with VW, citing that the deal is having an increasingly negative impact on the Japanese company; especially relating to independent management decision making at the highest level.

Currently; Volkswagen has 19.9 percent interest in Suzuki, while the the latter has just a 1.49 percent stake in the German giant. With the alliance deal now off the cards, Suzuki is hoping that VW will sell its shares in the company, though an official line from Wolfsburg is that VW has no intention of selling shares, nor reducing its stake in the Japanese automaker.

The Suzuki/VW partnership has been troubled from day one; the original plan was for both automakers to cooperate in the areas of technology, including hybrid vehicles as well as develop expansion plans into emerging markets. However, two years later, no such projects have come to fruition.

In addition, Suzuki has felt that increasingly, its role in the partnership was becoming overshadowed by VW; while the latter believes that the Japanese concern has been less than transparent in some of its dealings, especially relating to Fiat which is reportedly looking to form its own alliances with rival automakers.

More: Suzuki/VW Alliance Dies Over Fiat Engine Deal on AutoGuide.com
 
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