Tata Skoda partnership talks end as feasibility studies did not yield the desired results.
Homegrown Tata Motors and Skoda have ended the discussions around a likely partnership that would have had the two automakers and the Volkswagen Group share vehicle platforms, engines and even manufacturing facilities. Tata Motors and the Volkswagen Group had signed an MoU earlier this year with Skoda (a brand that operates under the Volkswagen Group) taking the lead to develop low-cost vehicles for India.
However, Tata Motors will remain positive of exploring future opportunities with the Volkswagen Group while both have kept the doors open for future partnerships. The primary reason for both the automakers to fall through is that the feasibility study did not yield the desired results as they expected. The joint study conducted over the past few months has both the automakers concluding that the anticipated areas of the partnership may not yield the desired results and that the strategic benefits for both were below the ‘threshold levels’.
Both the automakers were not ready to take the troubles of forming a partnership as the savings were not sufficient and the presence of multiple challenges with regards to the structuring of the deal. Meanwhile, the closure of the discussions will mean that Tata will have to work on its own to ready the AMP (Advanced Modular Platform) without the technical expertise from the German giant and also let’s not forget that the Volkswagen Group will have to immediately look at a new vehicle platform to stay relevant in the Indian market.
So to introduce a newer range of products, the Volkswagen Group might have to go ahead and invest in the MQB-A platform even if it’s an expensive affair.
Tata & Skoda End Discussions
– Tata Motors’ AMP platform is not proving to be as cost-effective
– Tata Motors’ passenger vehicle business is currently running under a loss
– Volkswagen Group will probably have to go ahead and invest in the MQB-A platform