Volkswagen, Tata Motors
plan to cooperate in India
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[March 10, 2017]
By Aditi Shah and Georgina Prodhan
NEW
DELHI/FRANKFURT (Reuters) - German carmaker Volkswagen said on Friday it
had signed a memorandum of understanding to explore a partnership with
India's Tata Motors to jointly develop auto components and vehicles for
the Indian subcontinent and beyond.
The announcement, which confirms a Reuters story from Thursday, comes as
both automakers look to hit the reset button in India after falling
behind more nimble rivals such as Maruti Suzuki and Hyundai Motor
Co.
Goldman Sachs analyst Pramod Kumar said in a note on Thursday a tie-up
could be "mutually beneficial" as the engine offerings of both companies
complement each other and would help the alliance match up to
competition.
Volkswagen (VW) said its Skoda unit would lead the project.
"The first step will address topics such as the application of specific
market knowledge as well as local development expertise," VW said in its
statement.
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For VW, the tie-up would provide an opportunity to make more headway
into India, which analysts say is expected to become the world's
third-largest auto market behind the United States and leader China by
2020.
"By offering the appropriate products we intend to achieve sustainable
and profitable growth in very different parts of the world," VW CEO
Matthias Müller said in the statement.
India has proven to be a tough market to crack for many foreign
automakers, given different demand trends across the country and rapid
changes in customer preferences.
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A Volkswagen logo is pictured at Volkswagen's headquarters in
Wolfsburg, Germany, April 22, 2016. REUTERS/Hannibal Hanschke/File
Photo
![](http://archives.lincolndailynews.com/2016/Aug/26/images/ads/current/rohlfs_lda_051513.png)
Besides VW, foreign automakers including General Motors <GM.N> and Ford Motor Co
<F.N> have struggled to ramp up sales in India, and are now pushing exports from
the country to use idle manufacturing capacity.
Even
domestic players such as Tata have struggled to quickly adapt to changing demand
trends in India, where Maruti Suzuki and Hyundai control two-thirds of the
market.
The partnership comes as Tata Motors tries to turnaround its loss-making
domestic business by launching more modern vehicles, improving efficiencies and
streamlining its organization.
"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," managing director
Guenter Butschek said in a separate statement on Friday.
Following a definitive agreement, the two companies plan to begin joint
development work and, based on this, Tata Motors said it intended to launch
products from the partnership in the Indian market starting in 2019.
(Writing by Promit Mukherjee and Euan Rocha; Editing by Christoph Steitz and
Mark Potter)
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