VW AG and TATA Motors formed an alliance to develop new products

Article by Christian A., on March 13, 2017

It seems the highly successful Renault-Nissan Alliance has led to more partnerships between carmakers. Volkswagen and TATA Motors have reportedly inked a longtime partnership deal on Wednesday. The two companies have allegedly signed a Mou or Memorandum of Understanding towards the development of new technologies, products and platforms. According to Autocar India, it has been more than a year since the manufacturers have been talking about the agreement.

The German automaker has been eyeing the Indian manufacturer as potential partner in exploring new markets. Being the largest vehicle firm in India, Tata Motors is also looking to increase its sales margin within or outside its market range. Nevertheless, this new partnership will help Tata come out with more vehicle lineups by 2019. It should be noted though that Jaguar, Land Rover and TAMO (TATA’s sub-brands) are not part of the alliance.

TATA’s latest AMP (or Advanced Modular Platform) is probably the most feasible architecture for the new collaboration. After the AMP received the EDAG approval, Volkswagen has found a more affordable alternative to its existing MQB-A platform. The AMP offers flexible architecture as well as definite cost advantage. At the very least, this will allow them to produce more extensive model range.

With Volkswagen group’s TOGETHER –Strategy 2025, the German car manufacturer plans to provide its brands with new responsibilities in both regions. TATA on the other hand has been consolidating its platforms from nine to six down to just two modular platforms.

However, it is still too early to speculate whether the Volkswagen-TATA partnership will be sharing one singular platform after the two inked up a deal. Whatever the case may be, this new collaboration gives Volkswagen the benefits of shared components and aggregates to save on cost.

Also, the teamwork will not be limited to India alone, wherein, the co-developed products can be exported to other markets as well. Since Volkswagen has earned its reputation when it comes to higher efficient smaller displacement engines, TATA can take advantage of this particularly in enhancing its products in the near future.

It’s been over 10 years since Volkswagen Group came to India but the German marque has yet to deliver an impressive sales figure. With its new alliance with the biggest Indian automotive company, Volkswagen can now look forward to a more cost-effective production of their vehicles without compromising their standards.

Matthias Müller, Volkswagen AG’s chief executive, said the company aims to “achieve sustainable and profitable growth” in all parts of the globe. Guenter Butschek, TATA’s Chief exec and managing director on the other hand believes that through this new partnership, both the companies can take advantage of each other’s strong points in order to develop smart solutions both for the overseas and Indian markets.

Press Release

Memorandum of understanding: Volkswagen Group and Tata Motors Ltd. to explore strategic alliance for joint development projects

Matthias Müller, CEO of Volkswagen AG, Bernhard Maier, CEO of ŠKODA Auto and Günther Butschek, CEO und Managing Director of Tata Motors Ltd., have signed a memorandum of understanding (MoU) which forms the basis for exploring long-term strategic cooperation in clearly-defined fields. The goal of the strategic alliance is to bundle the expertise of both car manufacturers with a view to jointly developing vehicle components and possibly also vehicle concepts.

For the Volkswagen Group, the signing of the MoU with Tata Motors Ltd. marks a further trailblazing step in the context of "TOGETHER – Strategy 2025". Under the terms of the memorandum, the Volkswagen Group and Tata Motors will explore possibilities for a strategic partnership in India.

In order to share responsibility among the Volkswagen Group brands, ŠKODA Auto is to lead the project. The first step will address topics such as the application of specific market knowledge as well as local development expertise. In the long term, the Volkswagen Group is looking to further expand its product portfolio in the fast-growing emerging markets.

"Our aim with the envisaged strategic partnership with Tata Motors is to lay the foundations in the Group and the brands that will enable us to offer customer-oriented mobility solutions in the emerging, fast-growing automobile markets, as elsewhere. By offering the appropriate products we intend to achieve sustainable and profitable growth in very different parts of the world. That is why we are systematically pursuing our regional growth strategy", Matthias Müller, CEO of Volkswagen AG, commented.

"We are delighted to announce our potential cooperation with Volkswagen Group and ŠKODA. We strongly believe that both the companies, by working together, can leverage from each other's strengths to create synergies and develop smart innovative solutions for the Indian and overseas market. This is in alignment with Tata Motors efforts to make itself ‘FutuReady' by embracing new technologies, fostering higher platform efficiency and offering solutions that connect with the aspirations of our customers", Günter Butschek, CEO and Managing Director of Tata Motors Ltd., commented.

"We are looking forward to the joint project with Tata Motors. Delegating project responsibility to ŠKODA underscores the great confidence of the Volkswagen Group in the ability of our brand. Together with Tata we will be specifying the concrete opportunities for collaboration over the coming months", Bernhard Maier, CEO of ŠKODA Auto, stated.

The contractual framework and the guidelines for a strategic cooperation between the Volkswagen Group and Tata Motors Ltd. will be examined and defined in detail over the coming months. Until then, the parties have agreed not to disclose any information.

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