In March 2017, Tata Motors and Volkswagen signed a Memorandum of Understanding (MoU) to explore a joint venture on the vehicle architecture, engines, and for the component sourcing.
However, Tata Motors, in an official statement, confirmed that they ceased discussions with Skoda, who was heading the project for the VW Group.
Commenting on this development, Guenter Butschek, CEO and Managing Director, Tata Motors, said, "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."
He added, "However, we remain positive of exploring future opportunities with the Volkswagen group, given the relationship of mutual respect that we witnessed during the phase of our cooperation discussions."
Tata Motors will continue to develop standalone products to bring exciting and world-class products to customers. Tata Motors and Skoda Auto performed a joint technical feasibility and commercial evaluation of a possible collaboration.
Based on the evaluation, both the companies have jointly concluded that the envisioned areas of the partnership may not yield the desired synergies as originally assessed. Nevertheless, the two companies have decided to keep in touch for future areas of collaborations.
The possible partnership has many benefits for both the manufacturers. While Tata Motors could have leveraged from VW's engineering expertise and develop top-notch products for the Indian and foreign markets, Volkswagen could have taken Tata's help in making small cars, which the German carmaker has been struggling in the Indian market.