Tata Motors and Volkswagen group firm Skoda on Thursday said they have decided not to pursue a proposed long-term partnership due to feasibility issues, just over four months after they had entered into the agreement. The companies said a joint technical feasibility study has found that strategic benefits for both parties are below the desired levels.
They, however, said that following intensive and constructive discussions of the last few months, they are not ruling out possible future collaborations. “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”. In a separate statement, Skoda Auto said: “…neither the technical nor the economic synergies are achievable to the extent desired by both parties. As a result, a planned strategic alliance will no longer be pursued for the time being.”
The Czech auto major further said: “Both companies would like to emphasise that following the intensive and constructive discussions of the last few months, they are not ruling out possible future collaborations.”
Tata Motors and Skoda Auto had undertaken a joint technical feasibility and commercial evaluation for their proposed collaboration but concluded that the envisioned areas of partnership may not yield the desired synergies as originally assessed.
In March this year, Tata Motors, Volkswagen group and Skoda 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.