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Volkswagen forced to sell stake in Suzuki

The six-year-long failed marriage between Volkswagen and Suzuki has finally come to an end. Almost. An arbitration panel in London issued its final verdict which, according to a VW press release, cleared Suzuki in terminating the agreement, so VW now needs to get rid of its 19.9-percent share. However, the tribunal's decision said VW performed all of its obligations and Suzuki didn't – the Japanese carmaker should have given VW last-call rights for a delivery of diesel engines, but failed to. The breach opens Suzuki up to damage claim, but so far VW only says it reserves the right to sue. Now that Suzuki has an outside investor to provide funds it meant to get from VW, perhaps both can get back to their reasons for being. The press release is below. Ruling in arbitration proceedings: Cooperation between Volkswagen and Suzuki deemed terminated - Arbitral tribunal confirms Volkswagen met contractual obligations and finds that Suzuki has ordinary right to terminate agreement based on reasonable notice - Volkswagen to dispose of its 19.9 percent stake in Suzuki and expects positive effect on Company's earnings and liquidity from transaction - Arbitrators also find that Suzuki breached its contractual obligations to Volkswagen under the agreement and that Volkswagen has right to claim damages Wolfsburg, 30 August 2015 - An arbitral tribunal in London has announced its ruling in the dispute between Suzuki Motor Corporation and Volkswagen Aktiengesellschaft. As a result, cooperation between the two parties is deemed terminated. The arbitrators confirmed that Volkswagen met its contractual obligations under the cooperation agreement and found that Suzuki has terminated the agreement upon reasonable notice. Volkswagen will therefore now dispose of its 19.9 percent stake in Suzuki and expects a positive effect on the Company's earnings and liquidity from the transaction. The arbitral tribunal also confirmed that Suzuki breached its contractual obligations to Volkswagen under the agreement and that Volkswagen has the right to claim damages. "We welcome the clarity created by this ruling. The tribunal rejected Suzuki's claims of breach and found that Volkswagen met its contractual obligations under the cooperation agreement. Nevertheless, the arbitrators found that termination of the cooperation agreement by Suzuki on reasonable notice was valid, and that Volkswagen must dispose of the shares purchased.

VW sets aside $7.3B war chest for diesel scandal fallout

The crisis enveloping Volkswagen AG, the world's top-selling carmaker, escalated Tuesday as the company issued a profit warning following a stunning admission that some 11 million of its diesel vehicles worldwide were fitted with software at the center of a US emissions scandal. The German company said it was setting aside around 6.5 billion euros ($7.3 billion) to cover the fallout from the scandal that has tarnished VW's reputation, raised questions over the future of CEO Martin Winterkorn and battered its share price. The reputational damage to Volkswagen is implicit in the market's response. Volkswagen's share price slid a further 16.2 percent Tuesday to a near four-year low of 112 euros. The fall comes on top of Monday's 17 percent decline. The shockwaves from the scandal enveloping Volkswagen were being felt far and wide across the sector as traders wondered who else may get embroiled. Germany's Daimler AG, the maker of Mercedes-Benz cars, was down 6.5 percent, while BMW AG fell 5.4 percent. France's Renault SA was seven percent lower. The scandal is hugely damaging to a business that relies heavily on a hard-won reputation for quality and trustworthiness. "Brands are all about trust and it takes years and years to develop. But in the space of 24 hours, Volkswagen has gone from one people could trust to one people don't know what to think of," said Nigel Currie, an independent UK-based sponsorship and branding consultant. The trigger to the company's market woes was last Friday's revelation from the US's Environmental Protection Agency that VW rigged nearly half a million cars to defeat US smog tests. The company then admitted that it intentionally installed software programmed to switch engines to a cleaner mode during official emissions testing. The software then switches off again, enabling cars to drive more powerfully on the road while emitting as much as 40 times the legal pollution limit. "We have totally screwed up." - Michael Horn "In my German words: we have totally screwed up," the head of Volkswagen's US division, Michael Horn, told an audience in New York on Monday. In its statement Tuesday, Volkswagen gave more details, admitting that there were "discrepancies" related to vehicles with Type EA 189 engines and involving some 11 million vehicles worldwide. The number of vehicles involved is more than the 10 million or so cars it sold in 2014.

Autoblog Minute: VW Q3 financial woes, 2015 Tokyo Motor Show

Consumer Reports pulls its Tesla recommendation, the U.S. Copyright Office offers a ruling affecting car owners, VW gets hit hard with third-quarter losses, and lots of exciting news from Tokyo. Autoblog senior editor Greg Migliore reports on this edition of Autoblog Minute Weekly Recap. Show full video transcript text [00:00:00] Consumer Reports pulls its Tesla recommendation, the U.S. copyright office offers a ruling that affects car owners and gear heads, VW gets hit hard with third-quarter losses, and lots of exciting news from Tokyo. I'm senior editor Greg Migliore and this is your Autoblog Minute Weekly Recap. After a week away testing vehicles for Autoblog's Tech of the Year award, we're back in the office to recap the week in automotive news. [00:00:30] One of the things you might have missed was Consumer Reports pulling its recommendation of Tesla's Model S sedan. The blemish for Tesla comes after a tally of reviews from customer surveys. The most common problem areas for the Model S as cited by survey takers included: the drivetrain, power equipment, charging equipment, body and sunroof squeaks, rattles, and leaks. So lots of stuff. Though they could not ignore a score of "worse-than-average", Consumer Reports still [00:01:00] highlighted the fact that the Model S was "the best performing car" they've ever tested. Telsa CEO Elon Musk took to social media to defend his sedans saying: "Consumer Reports reliability survey includes a lot of early production cars. Already addressed in new cars." And, "Tesla gets top rating of any company in service. Most important, CR says 97% of owners expect their next car to be a Tesla (the acid test)." In Financial news, Volkswagen took a hit and reported an operating loss of [00:01:30] $3.84 billion. This is the first such loss for VW in 15 years. Toyota reclaimed the crown as the world's largest automaker as well. It's important that it's not all doom and gloom for VW though in Q3. Sales revenues were up and the company's automotive division boasts $30 billion dollars in liquid assets. It's a sizable war chest that will no doubt come in handy, as the company has yet to feel the full brunt of the diesel emissions scandal. Good news for gear heads. The US copyright office [00:02:00] ruled in favor of mechanics and car owners by granting an exception to existing copyright law. The law was originally meant to prevent software pirating and bootlegging of Hollywood movies.