Tata Motors and Skoda call off proposed partnership

In recent weeks, the proposed Memorandum of Understanding between Tata Motors and Volkswagen (VW) Group, along Skoda has been vetted thoroughly. Signed at Geneva Motor Show 2017 back in March, the proposition was to explore long-term cooperation to jointly develop products. The alliance meant a common platform basis which both brands would develop cars independently.

Sadly, the MoU no longer proves beneficial, and will not come to fruition. Resultantly, the strategic alliance between Tata Motors and Skoda is no longer being pursued at present. Future collaborations are not being ruled out just as yet.

From left to right: Bernhard Maier, CEO of ŠKODA Auto, Matthias Müller, CEO of Volkswagen AG and Günter Butschek, CEO & Managing Director of Tata Motors Ltd. when the MoU was signed in March this year.

Skoda and Tata Motors has evaluated the suggested strategic collaboration and determined that as things stand now, any technical or economic synergy would not help either company to the extent they had hoped for after conducting a joint technical feasibility study and commercial evaluation. As was initially considered, Tata’s next-gen Advanced Modular Platform (AMP) was to be used as the common alliance platform owing to its cost advantage over Volkswagen’s MQB-A platform.

Tata Motors will launch its first AMP-based premium hatchback sometime in 2019 with more cars to be spawned off the platform in future. Currently, Tata Motors has been reconstructing operations to concentrate cost saving, and investing in certain projects. The need is to give its commercial vehicle unit a shot in teh arm with sales having flatlined.

tamo-racemo

Tata Motors has also shelved its Racemo project, and cut pay packages as part of its consolidation process along with axing the annual T1 Prima Truck racing Championship. Streamlining has also resulted in its Geneva Motor Show participation being cancelled.

Volkswagen Group does have the versatile MQB-A platform to depend on globally. Manufacturing on the platform has not yet been introduced in India, and as such, MQB-based products (VW Tiguan, Skoda Octavia and Superb, Audi A4) are assembled at the Aurangabad plant with minimal localisation.