Tata Motors, Volkswagen and Skoda end their strategic partnership

Earlier this year, Tata Motors, India’s largest automobile company and Volkswagen Group, one of the world’s leading automobile manufacturers and the largest carmaker in Europe had signed a Memorandum of Understanding (MoU) for a long-term partnership. Both companies have ended the partnership.

Tata Volkswagen and Skoda Logos

As per the strategic alliance, both car manufacturers were looking forward to developing vehicle components and vehicle concepts. Skoda would have introduced new India-specific products based on Tata’s Advanced Modular Platform (AMP) which has a cost advantage against VW’s MQB-A platform.

Tata Motors could have also benefitted VW’s electrical architecture which is supposed to be superior to their own. It was also reported that Tata Motors could also produce engines for the Volkswagen Group with high localization.

In the past months, Skoda and Tata Motors have performed a joint technical feasibility and commercial evaluation of this potential collaboration. In doing so, both companies have concluded that at present, neither the technical nor the economic synergies are achievable to the extent desired by both parties as originally assessed.

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Guenter Butschek, CEO and Managing Director, Tata Motors, said, “We have evaluated the technical feasibility and degree of synergies for the envisioned partnership. We have concluded that the strategic benefits for both parties are below the threshold levels. However, we remain positive of exploring future opportunities with the Volkswagen group, given the relationship of mutual respect that we witnessed during the phase of our cooperation discussions.”

Both companies have decided to keep in touch and are not ruling out possible future collaborations. Meanwhile, Tata Motors will continue to pursue its standalone product strategy to bring exciting and world-class products to its customers. This development could also lead the Volkswagen group to work on localizing their MQB-A platform in order to bring their global products to India.