Suzuki's intention to buy further Multijet turbodiesel engines from Fiat Powertrain has brought its strained relations with partner and shareholder Volkswagen to a boiling point with the German carmaker announcing yesterday that this deal infringed its cooperation agreement.

"The review of the partnership with Suzuki Motor Corp announced by Volkswagen Aktiengesellschaft has brought its first results. Volkswagen stated in Wolfsburg on Sunday that the company is serving notice of an infringement by Suzuki of the cooperation agreement concluded in December 2009," an official statement issued by Volkswagen AG in Wolfsburg yesterday read.

VW and Suzuki's difficult relationship has become increasingly strained in recent months. VW holds a 19.9 percent stake in the Japanese carmaker which it paid US3$3.9 billion for in December 2009 when it entered into a strategic cooperation with the Japanese firm. In its half-yearly financial report published in July, VW noted that the partnership is developing more slowly than expected and announced it was going to conduct a review; "This review has not yet been finalised," it said in yesterday's press release. VW also stated in July that it was in a position to "significantly influence financial and operating policy decisions".

Following the equity stake the two manufacturers had planned to enter into joint ventures across a number of areas, including hybrid and electric vehicles, but nothing has yet materialised in almost two years. In July the Suzuki's Chairman raised the ante of the strained relations by telling reporters that he hadn't evaluated any VW technology so far that was of interest.

VW's statement yesterday adds: "The notice concerning the infringement relates to the supply of diesel engines produced by another manufacturer to Suzuki. Volkswagen takes the view that this contradicts the terms of the cooperation agreement. Suzuki has now been given a period of several weeks to remedy the infringement. Volkswagen considers this step regrettable, but necessary, and has offered to discuss the matter with Suzuki. At the same time, the company stresses it still regards Suzuki as an attractive investment."

Suzuki already assembles Fiat Powertrain's 1.3 litre Multijet 16v under licence for a range of its cars built and sold on the Indian market and holds further as yet unused right to build a larger capacity version. The new arrangement will see Fiat India assembling engines itself for Suzuki at its heavily underused factory at Ranjangaon in India as the Japanese carmaker gears up to meet increasing demand in this market. It will also supply engines for Suzuki cars to be built in Hungary.