CHENNAI: Two of the world’s largest, and yet struggling, automakers, signed a pact on Wednesday to
explore the possibility of working together to develop a new range of products. These, according to the Memorandum of Understanding (MoU) will be shared by Tata, VW and the latter’s unit Skoda Auto AS.
According to sources (no formal announcement has been made so far) the MoU was signed Guenter Butschek, chief executive officer of Tata Motors and Matthias Muller, chief executive of the VW Group, in Geneva. The MoU will open up the possibility of a full-fledged joint venture between the two groups.
“Any MoU of this kind will open up the way for closer collaboration in the form of a JV. There will be a wider range of discussions, sharing of data and information that reveal any synergies to be had between the two firms,” pointed out an expert.
The deal has been in the works for a while. Volkswagen had reportedly pushed for joint development of its MQB-A platform, however, the platform was a tad bit expensive for the price sensitive Indian market. Sources say the MoU has agreed on Tata’s Advanced Modular Platform.
The alliance, if it fructifies, will also develop components and new technologies.
Analysts say that the two groups stand to gain a lot from such a partnership. For Tata, it means having immense economies of scale on its side. It will also cut down the costs of developing the AMP platform. For Volkswagen, it will give a foothold in the Indian market it can hopefully exploit.
One of the world’s largest automakers, it is still a small player in India, where its products are too expensive. Gaps in its portfolio, especially in the mid segment, have not helped it either. The company is striving hard to change the consumer’s perception about the Tata Motors brand which was further hit by the Nano, the cheapest car in India.
Tata Motors has not been able to transform its brand image though rivals Maruti Suzuki has successfully made the transition to a manufacturer of premium cars from a affordable-to-own mass market carmaker.
Two of the world’s largest, and yet struggling, automakers, signed a pact on Wednesday to
explore the possibility of working together to develop a new range of products. These, according to the Memorandum of Understanding (MoU) will be shared by Tata, VW and the latter’s unit Skoda Auto AS.
According to sources (no formal announcement has been made so far) the MoU was signed Guenter Butschek, chief executive officer of Tata Motors and Matthias Muller, chief executive of the VW Group, in Geneva. The MoU will open up the possibility of a full-fledged joint venture between the two groups.
“Any MoU of this kind will open up the way for closer collaboration in the form of a JV. There will be a wider range of discussions, sharing of data and information that reveal any synergies to be had between the two firms,” pointed out an expert.
The deal has been in the works for a while. Volkswagen had reportedly pushed for joint development of its MQB-A platform, however, the platform was a tad bit expensive for the price sensitive Indian market. Sources say the MoU has agreed on Tata’s Advanced Modular Platform.
The alliance, if it fructifies, will also develop components and new technologies.
Analysts say that the two groups stand to gain a lot from such a partnership. For Tata, it means having immense economies of scale on its side. It will also cut down the costs of developing the AMP platform. For Volkswagen, it will give a foothold in the Indian market it can hopefully exploit. One of the world’s largest automakers, it is still a small player in India, where its products are too expensive.
Gaps in its portfolio, especially in the mid segment, have not helped it either. The company is striving hard to change the consumer’s perception about the Tata Motors brand which was further hit by the Nano, the cheapest car in India. Tata Motors has not been able to transform its brand image though rivals Maruti Suzuki has successfully made the transition to a manufacturer of premium cars from a affordable-to-own mass market carmaker.