Suzuki Denies Talks with Volkswagen

Suzuki's CEO yesterday denied rumors about potential talks between the Japanese manufacturer and Volkswagen saying the Germans were interested in taking over a 10 percent stake in Suzuki. Last week, a report revealed that Volkswagen plans to buy a stake in the Japanese carmaker that would allow it concentrate on micro cars using Suzuki's know-how.

But Suzuki Chief Executive Osamu Suzuki yesterday said he had no contact with Volkswagen.

"So far there's been absolutely no contact (with Volkswagen)," Chief Executive Osamu Suzuki was quoted as telling the Chunichi Shimbun daily according to Reuters. "Lately, we've been the victim of a lot of rumors (of equity tie-ups and cooperation deals)."

A source close to the matter told Reuters last week that Volkswagen is eyeing a stake in Suzuki to increase its experience in the ultra small car sector.

"You have see it through an Asian perspective, particularly a Japanese one. There are vehicle sizes and classes that cannot be found here," the person said. "You only see them at the Tokyo motor show but it is undoubtedly an interesting segment, just have a quick look at the developing markets like India. It's correct that there is a gap there that could be closed."

"It's not that far along," the source said. "Volkswagen are first discussing the possibilities of a cooperation".

A group of analysts said a potential deal between Volkswagen and Suzuki would be useful for both companies. "Volkswagen could benefit from an alliance by increasing its product lineup in the ultra-small car segment... Suzuki could benefit from VW's know-how regarding diesel engines," Marc-Rene Tonn, MM Warburg analyst commented on the rumors last week.