VW's Skoda, Tata end cooperation talks after failing to hit cost targets

Paterniano Del Favero
Agosto 10, 2017

According to an official statement we received on behalf of Tata, the two companies performed a joint technical feasibility and commercial evaluation of a potential collaboration. It did not rule out future cooperation though with Tata, which is the largest Indian auto producer. Based on intense and constructive discussions, both the companies have jointly concluded that the envisioned areas of partnership may not yield the desired synergies as originally assessed, said the company.

Cooperation talks between Germany's Volkswagen Group (VOWG_p.DE) and India's Tata Motors (TAMO.NS) about joint development of a auto for emerging markets have ended amicably, the two companies said on Thursday.

In March Tata Motors and VW announced a Memorandum of Understanding (MoU) for a long-term partnership to explore joint development of products for customers in India and other markets.

VW commissioned Skoda to lead the talks and explore a possible entry-level auto platform using Tata's AMP vehicle platform.

"We have evaluated the technical feasibility and degree of synergies for the envisioned partnership".

This surely comes as a bummer to both parties.

The company, which posted a loss of Rs 467 crore in the recently concluded quarter on the stand-alone level, has cut down on costs, discontinued unfeasible projects and cut its manpower to be back into the black.

In February 2017, Tata had announced that it wished to develop all future products on just two platforms, unlike the half-a-dozen platforms it's now utilizing for its models. While Tata Motors is independently pursuing each of these technologies a successful partnership with VW would have helped it leap frog several years of development cycle. Talks for a partnership between Tata Motors and Volkswagen began before July past year under the aegis of ousted Tata Group chairman Cyrus Mistry.

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