India’s largest automobile company by revenue- Tata Motors, and Europe’s largest car maker by volume- Volkswagen group, are said to be at an advance stage of finalizing a partnership that can have a wide-ranging effect on India and other markets.
The contour of the partnership is yet to be worked out whether it will be a joint venture or a technology tie-up. They are still making progress in negotiations which could wrap-up in an announcement at the Geneva International Motor Show to be held in March.
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Vehicle architecture and technology sharing is the focus area of the discussion. The companies are seeking sharing modular platforms including the advanced modular platform (AMP) which is developed by Tata Motors. Technical knowhow may be offered by Volkswagen on producing multiple models based on modular architecture.
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The two companies are exploring too whether Tata Motors can use MQB A0 platform of Volkswagen. Tata’s Jaguar Land Rover unit has held aloft with the domestic car business doing poorly.
A person said, “To enlarge the product portfolio with tailor-made solutions, for example in India, Volkswagen Group is discussing and defining these proactively with potential partners as well as between the brands of the Group. It is therefore premature to make any further disclosures at the moment.”
“As prevalent in the automotive industry, we regularly have discussions with different companies to explore future collaborations but we do not have any specific announcements at present,” said a spokesperson of Tata Motors.
This deal will be the first major deal under the stewardship of new Tata Sons chairman N Chandrasekaran, however the discussion began under the tenure of predecessor Cyrus Mistry.
One of the people cited above said several groups of executives from Europe began to travelling India for talks with due diligence having also been undertaken. Tata Motors have held meetings not only for the single time, as it had showcased the tie-up at the time of Pixel concept at Geneva in 2011 and Volkswagen was gearing up to launch the mini-car Up globally.
The executive said, “While Tata Motors is consolidating from six platforms to two, each and every hundred thousand units is additional leverage and any additional economies of scale will structurally improve the cost competitiveness.”
As the non-traditional players such as Apple and Google emerged more competition and the norms become stringent, the industry is witnessing tie-ups between rivals. Toyota has jointed its hands with Suzuki and General Motors has recently decided to unit with PSA Group to trade the Opel brand in Europe.
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