Tata Motors, Skoda call off partnership plan

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Volkswagen Group and Tata Motors ended efforts to forge a small-car and new mobility cooperation, five months after the two vehicle groups started to explore ways to work together in India and other fast-growing markets.

Volkswagen's VOWG_p.DE Czech division Skoda said talks with India's Tata Motors TAMO.NS on a strategic alliance have ended because the two carmakers failed to achieve planned cost savings.

Volkswagen's entry-level Skoda brand was due to develop an entry level vehicle platform together with Tata.

Tata Motors and Skoda Auto have performed a joint technical feasibility and commercial evaluation of a potential collaboration.

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The decision to call off the agreement comes amid mounting losses at Tata Motors' India operations and efforts to turn around the business by Guenter Butschek, managing director and chief executive at the firm. With design and R&D centres located in India, the UK, Italy and Korea, Tata Motors strives to pioneer new products that fire the imagination of GenNext customers.

The company said a joint technical feasibility study has found that strategic benefits for both parties are below the desired levels, although it has kept the doors open for future collaborations with the VW group. "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".

"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, confirming a Reuters story. On the other hand Skoda Auto was to take the lead on behalf of the Volkswagen Group to drive forward work towards development of vehicle concepts in the economy segment.

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