Tata Motors, Volkswagen Group End Talks For Potential Partnership

Cooperation talks between Germany's Volkswagen Group and Tata Motors about joint development of a car for emerging markets have ended amicably, a Volkswagen Group source said on Thursday. 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. Volkswagen was not immediately available for comment.

Commenting on this development, 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."

Skoda too issued a statement saying - "The Skoda brand has assessed and evaluated a potential strategic collaboration with Tata Motors Ltd over recent weeks and months. In doing so, both 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 emphasise that following the intensive and constructive discussions of the last few months, they are not ruling out possible future collaborations."

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

Volkswagen's entry-level Skoda brand has been commissioned by VW to lead the talks with Tata and was exploring a possible entry-level car platform together with the Indian manufacturer, using Tata's AMP vehicle platform as a basis.

Volkswagen's Skoda division dropped the idea of developing the AMP platform on fears that it would need significant further investment to meet future crash-test and emissions requirements said the source, who declined to be named.

"VW-Skoda have decided to drop the idea of partnering with Skoda and AMP and instead explore VW's own MQB platform for possible further synergies," the source said.Tata Motors will continue to pursue its standalone product strategy to bring exciting and world-class products to its customers.

(Reporting by Frankfurt Newsroom; Additional reporting by Andreas Cremer in Berlin and Aditi Shah in New Delhi; Editing by Georgina Prodhan)

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