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Suzuki begins arbitration against Volkswagen

By Rashmi Kumar

Family-controlled carmaker Suzuki has started arbitration proceedings against Volkswagen, as it aims to end its alliance with the German group by buying back its shares.

The arbitration, which will take place in London, follows Volkswagen’s “lack of response to Suzuki’s requests for the disposition of its shares” either back to the company or a third party, according to a statement issued by Japan’s Suzuki.

Volkswagen, headed by Ferdinand Piech, the grandson of the founder, currently holds a 19.9% stake in the Hamamatsu-based car manufacturer - VW rejected a purchase offer in September by Suzuki family business head Osamu Suzuki.

This is the latest in a clash between the two family-controlled automobile manufactures after VW, which is the third-largest carmaker in the world in terms of sales, accused its Japanese counterpart of breaching the terms of their cooperation agreement.

Although Suzuki denied the allegations, it was the beginning of the end of the relationship between the two family-run companies, which had been troubled since the start due to a failure to produce a single joint venture project.

Founded in 1909 by Michio Maruti Suzuki, the Japanese multinational corporation is currently led by Osamu, who is married to Michio’s granddaughter.

Volkswagen, which had revenues of around €80 billion in 2010, is led by the Piech family, which owns 32.2% of the Wolfsburg-based business.