Tata Motors, Skoda call off partnership plan

Tata Motors, Volkswagen's Skoda Auto to call off proposed alliance

VW group's Czech subsidiary Skoda said Thursday the two carmakers had come to the conclusion that the strategic alliance would not be able to achieve "the technical and economic synergies in the desired way".

In March, VW and Tata Motors signed a memorandum of understanding for a long-term partnership to explore joint development of products for customers in India and other markets.

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

The two companies were exploring using Tata Motors' AMP (Advanced Modular Platform) with VW technology to build small cars. But the idea had been dropped on fears that it would need significant further investment to meet future crash-test and engine emissions requirements, the source said.

"We have assessed the technical feasibility and degree of synergies for the visualized partnership".

But the two automakers, which also studied joint development of components, did not rule out the possibility of collaboration in the future after holding what Skoda called "constructive talks" over the past five months. "As a result, the strategic alliance project will not be pursued at this time", the manufacturer said.

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VW shares closed 0.7 percent lower at 127.15 euros.

Suzuki and its Indian partner Maruti hold a almost 50 pc share of the Indian market.

Both firms have had a patchy innings in a market that is poised to become the world's third largest by 2020.

Both Volkswagen and Tata Motors are struggling to grow volumes in India, where market leader Maruti Suzuki is continuing to increase its dominance, while the likes of Honda and Ford are seen getting aggressive.

VW and Skoda have made a decision to explore VW's MQB platform for possible further synergies, the source said.

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