Volkswagen-Tata to launch products in India in 2019, eyeing international market too – Economic Times
NEW DELHI: Homegrown auto major Tata Motors will form a long term partnership with Volkswagen Group and Skoda to explore strategic alliance opportunity for joint development of products, technologies and component sourcing.
Tata Motors and Skoda Auto, representing the Volkswagen Group, will detail out the guiding principles and terms of cooperation in the next few months, Tata Motors said on Friday.
“Post successful completion of definitive agreements, the two companies will start joint development work and joint value chain activities. Based on this joint work, Tata Motors plans to launch products in the Indian market, starting calendar year 2019,” it said in a statement.
The agreement for the alliance was signed by Guenter Butschek, managing director of Tata Motors, Matthias Mueller, CEO ofVolkswagen AG, and Bernhard Maier, CEO of Skoda Auto on the sidelines of the Geneva Auto Show on Wednesday.
“We strongly believe that both the companies, by working together, can leverage from each other’s strengths to create synergies and develop smart innovative solutions for the Indian and overseas market. This is in alignment with Tata Motors’ efforts to make itself ‘FutuReady’ by embracing new technologies, fostering higher platform efficiency and offering solutions that connect with the aspirations of our customers,” Butschek said in the release.
The possible partnership was first reported by ET in its edition on February 21. It said the advance modular platform being developed by Tata Motors is under consideration for the partnership with Volkswagen Group both in India and other emerging markets. A spokesperson at Volkswagen India, in response to a query from ET, said the alliance was a step forward in their future programme ‘TOGETHER – strategy 2025’.
“By offering the appropriate products, we intend to achieve sustainable and profitable growth in very different parts of the world. That is why we are systematically pursuing our regional growth strategy,” said Matthias Muller, CEO of Volkswagen AG. Puneet Gupta, associate director at IHS-Markit, said the deal is a win-win for both companies.
“TataMotors and Volkswagen have both been struggling to grow volumes in the Indian market. If they manage to develop a platform cost effectively, they can grow footprint in India,” he said.
“Tata Motors can increase utilisation of idle capacity by means of products spawned off the platform. Volkswagen can sell these in India as well as in other emerging markets where it has limited presence currently. India is a rapidly growing market and VW cannot afford to ignore the country if it wants to remain the number one car maker globally,” he said.
Tata Motors and Volkswagen had first explored a tieup in 2013 when the former showcased the Pixel concept at Geneva and Volkswagen was gearing up to introduce mini car UP globally. They did explore a partnership, but things did not progress. Volkswagen in India, with an ageing portfolio built around Polo and Vento, is yet to get a major facelift.
The German carmaker explored the UP platform for India around 2012-2013, but dropped the project due to a lack of clarity on viability. VW then explored its modern modular platform MQB for India in 2014-15, but dropped the project because it was too expensive. Further it decided to conserve resources especially after the ‘dieselgate’ issue.