Published: Fri, August 11, 2017
Economy | By Annette Adams

Tata Motors, Skoda-VW hit the brakes on tie-up

Tata Motors, Skoda-VW hit the brakes on tie-up

"The two companies have come to the conclusion that at the present point of time the technical and economic synergies can not be realized in the desired way", Skoda said on Thursday.

The collapse of the talks is a further blow to VW's efforts to develop a cheap platform for Asian markets, after an earlier alliance with Suzuki also fell apart.

Four months after Tata Motors CEO and MD Guenter Butschek signed an MoU with Skoda-led Volkswagen Group to jointly develop a small auto platform, the partnership officially ended on Thursday.

Tata Motors, on the other hand, has been seen focussing on revamping its commercial vehicle business, which is its biggest revenue generator, yet has been consistently losing marketshare to the likes of Ashok Leyland and BharatBenz. Resultantly, the strategic alliance between Tata Motors and Skoda is no longer being pursued at present.

In recent weeks, the proposed Memorandum of Understanding between Tata Motors and Volkswagen (VW) Group, along Skoda has been vetted thoroughly.

In addition to new mobility initiatives, VW and Tata also explored the possibility of jointly developing vehicle components and wanted to investigate whether they could together develop concepts for entire new vehicles.

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".

The anticipated cost savings and technical synergies from a tie-up fell short of expectations, the Indian auto maker and VW's Skoda unit, which was leading the talks, said on Thursday.

VW shares closed 0.7 percent lower at 127.15 euros. The two groups ended their discussions on a possible collaboration on the development of a vehicle for emerging markets. VW "will now seek new synergies with Volkswagen's MQB platform", the source added.

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