Tata Motors signs MoU with Volkswagen

Tata Motors on Friday announced the signing of a Memorandum of Understanding (MoU) for a long-term partnership with Volkswagen Group and Skoda, to "explore strategic alliance opportunity for joint development of products". The agreement -- signed by Guenter Butschek, CEO & MD of Tata Motors, Matthias Mueller, CEO of Volkswagen AG and Bernhard Maier, CEO of Skoda Auto -- lays down the "modalities and terms of a long-term cooperation in identified areas of partnership," said a company statement. The statement also added that Skoda Auto will "take the lead on behalf of the Volkswagen Group to drive forward work towards development of vehicle concepts in the economy segment".

The respective CEOs explained their reasoning for the tie up -- Tata Motors is looking for future-ready technologies while Volkswagen group is eager to crack emerging markets like India.

Said Guenter Butschek, CEO and Managing Director, Tata Motors, said, "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."

"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 Muller, CEO of Volkswagen AG, commented. "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.

Tata Motors and SKODA Auto, representing the Volkswagen Group, will detail out the guiding principles and terms of cooperation in the next few months. Post successful completion of definitive agreements, the two companies will start joint development work and joint value-chain activities. Based on this joint work, Tata Motors plans to launch products in the Indian market, starting calendar year 2019.

Skoda and Volkswagen have not had a successful run in the Indian market despite rolling out very well-engineered products. Tata Motors, on the other hand, will need cutting edge technology to leapfrong into the next generation. In the past too Tata Motors have had a long relationship with Fiat and Mercedes Benz. Gobally auto industry goes through cycles of mega JVs and breakups. In the 90s, there were several such global clusters including a 12-year marriage between Daimler and Chrysler, Suzuki and General Motors and Hyundai, Mitsubishi and Chrysler were once part of Global Engine Alliance. Most of those mega takeovers/partnerships fizzled out, the most well-known being Daimler Chrysler. Volkswagen's own alliance with Suzuki also came apart.It remains to be seen whether the Tata-VW partnership will work.