Tata Motors, VW Partnership Unlikely To Go For Joint Product Development
Over the last few days, there has been a lot of speculation that the alliance between Tata Motors and Volkswagen (VW) Group would be called off due to numerous factors. While that has not been officially confirmed by either of the OEMs, BW Businessworld has learnt that both of them are not interested in go ahead with a joint product development as that would clash with their business interests in India. It is interesting to note that despite several hiccups, VW and Tata have reportedly not jumped to any conclusion and are currently looking at other synergies which would be sustainable.
According to sources aware of the development, "It was earlier decided that Tata Motors would contract manufacturer for VW's products in the mass market segment. However, it is not working out as both the companies are maximising their presence in the Indian market. Moreover, it's possible that VW may be exploring the same options with Skoda which is their group company and have the potential to deliver a product which can be equally competitive in the Indian market. Skoda has learned the art of making in India and if given an opportunity can definitely deliver on VW ambitions."
It was reported earlier that VW and Tata Motors had signed a Memorandum of Understanding in March to develop a common platform for each other's products. It was agreed that Tata's AMP platform would be used as the common platform since it offered the cost advantage over VW's and the products based on this platform were expected to be rolled out from 2019. However, VW is having reservations about the cost benefits derived from Tata's platform. It has also been learnt from well-informed sources that while the German carmaker is not ready to share its next-generation technology like electric and hybrid powertrains with the local partner, the Indian automaker is also not comfortable in losing its domestic market share to any other foreign player.
However, when VW and Tata Motors were contacted by BW Businessworld, the spokespeople from both the firms gave an identical reply stating, "We are currently in the phase of evaluating the potential cooperation based on technical feasibility and adequate levels of synergies. 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."
Puneet Gupta, South Asia Manager -Vehicle Sales Forecast, IHS Markit, stated, "There are clouds hovering around this new Tata-VW relationship. It's a win-win proposition for both the OEMs in the short term as both of them are struggling in the Indian market today. However, in the long term, the goals of both are to become a strong player in India car market. This is a clear clash between their goals and they may not like to share their expertise in their own areas."
