Skoda, Tata Motors End Partnership. What It Means?

It was back in March this year; when Tata Motors announced the signing of a Memorandum of Understanding (MoU) for a long-term partnership with Volkswagen Group and Skoda, to explore strategic alliance opportunity for joint development of products. Based on this joint work, Tata Motors was to launch products in the Indian market, starting calendar year 2019. Skoda Auto was to take the lead on behalf of the VW Group to drive forward work towards development of vehicle concepts in the economy segment. The move would see Tata Motors develop all future products on VW's modular platforms, particularly the MQB platform.

Also Read: Tata Motors, Volkswagen Group End Talks

However, the Skoda board decided to drop the idea on fears that it would need significant further investment to meet future crash-test and emissions requirements. The collapse of the talks is a further blow to Volkswagen's efforts to develop a cheap vehicle platform for Asian markets, after an earlier alliance with Japanese partner Suzuki also fell apart.

(It was back in March this year; when Tata Motors announced the signing of a MoU for a long-term partnership with VW and Skoda)

"The Skoda brand has assessed and evaluated a potential strategic collaboration with Tata Motors Ltd over recent weeks and months. In doing so, neither companies have concluded that at present, neither the technical nor the economic synergies are achievable to the extent desired by both parties. As a result, a planned strategic alliance will no longer be pursued for the time being. Both companies would like to emphasize that following the intensive and constructive discussions of the last few months, they are not ruling out possible future collaborations," Skoda said in a statement.

Also Read: Skoda- Tata Motors Deal: Things To Know

Guenter Butschek, CEO and Managing Director, Tata Motors, said, "We have evaluated the technical feasibility and degree of synergies for the envisioned partnership. We have concluded that the strategic benefits for both parties are below the threshold levels. However, we remain positive of exploring future opportunities with the Volkswagen group, given the relationship of mutual respect that we witnessed during the phase of our cooperation discussions."

Tata Motors will, however, continue to pursue its standalone product strategy to bring exciting and world-class products to its customers.