Tata Motors, Volkswagen alliance runs into problems within three months

In March this year, Tata Motors, Volkswagen Group and Skoda had announced an alliance for the joint development of products with the first roll-out expected in 2019.

By: | Updated: June 28, 2017 6:36 PM

tata motors, tata motors fund raising plan, tata motors non-convertible debentures, tata motors ncd

Within just over three months of signing a co-development agreement, the partnership between Tata Motors and Volkswagen Group has run into rough weather, with differences over the use of platform and doubts related to business viability. In March this year, Tata Motors, Volkswagen Group and Skoda had announced an alliance for the joint development of products with the first roll-out expected in 2019. Skoda Auto was handed the responsibility to take the lead on behalf of the Volkswagen group for development of vehicle concepts in the economy segment.Over three months after the announcement, according to industry sources differences have cropped up between the partners, especially on which vehicle platform to be used. The two companies were exploring using Tata Motors' AMP(Advanced Modular Platform) with VW technology, especially electronics, for products meant for emerging markets in order to gain a significant cost advantage over VW's MQB-A platform.
"It has turned out to be expensive. After discussions, there is a realisation to some extent that the business the proposition of such a collaboration is not as attractive as it was assumed," a source said.When contacted, a Tata Motors spokesperson said: "We are currently in the phase of evaluating the potential co-operation based on technical feasibility and adequate levels of synergies". He further said: "We will communicate concrete details of the outcome at the right time. Till then, it will be premature to disclose any information or respond to such speculations".

Query sent to VW India spokesperson remained unanswered.As per their long-term partnership agreement, Tata Motors and Skoda Auto were to develop the guiding principles and terms of cooperation in the following few months.
The partners were supposed to start joint development work and joint value-chain activities only after successful
completion of definitive agreements. In February, Tata Motors had stated that it would reduce the number of PV platforms to just two from the current six by 2018 when it shifts to what it called as 'Advanced Modular
Platform (AMP)' to "deliver 7-8 product variants from two platforms for greater coverage and sizeable economies of
scale".

The first of the AMP-based product in the form of the premium hatchback was expected for launch in 2019. The company was also looking at introducing a sedan crossover and a compact SUV based on the platform.
On the other hand, VW has been exploring bringing new products based on its MQB-A platform to India but has been constrained by high price for the mass market segment. At present, the group sells models like SUV Tiguan, Skoda Octavia and Superb and the Audi A4 based on the platform. PTI