Tata Motors, Skoda call off partnership plan over lack of ‘desired synergies’

Tata Motors 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
Tata Motors and Skoda had performed a joint... Source: PTI
Reported by: PTI New Delhi 10 Aug 2017, 07:16 PM IST

Tata Motors today said it has ended talks with Volkswagen group’s auto maker Skoda on their proposed partnership following feasibility issues, a move that comes just over four months after they had entered the agreement.

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.

“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,” Tata Motors CEO and Managing Director, Guenter Butschek, said in a statement.

He, however, said: “We remain positive of exploring future opportunities with the Volkswagen group".

The statement said Tata Motors and Skoda Auto had performed a joint technical feasibility and commercial evaluation of a potential collaboration.

“Based on intense and constructive discussions, both the companies have jointly concluded that the envisioned areas of partnership may not yield the desired synergies as originally assessed,” it added.

The two companies have decided to keep in touch for future areas of collaborations, it added.

Tata Motors, Volkswagen group and Skoda had in March this year announced entering into a long-term partnership for joint development of products with the first rollout expected in 2019.

Based on the strategic alliance, Tata Motors had planned to launch products in the Indian market starting calendar year 2019. 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.

However, in June it emerged that the partnership had run into rough weather, with differences over use of platform and doubts related to business viability.

The two companies were exploring using Tata Motors’ AMP (Advanced Modular Platform) with VW technology, specially electronics, for products meant for emerging markets in order to gain significant cost advantage over VW’s MQB-A platform.

It had turned out expensive and there was a realisation that the business proposition of such a collaboration was not as attractive as it was assumed.

 
 
 

Write a comment

 

More from business