Tata Motors confirmed that it is in discussion with the world’s largest automaker Volkswagen for a possible partnership.
Two of the world’s largest automakers, Tata Motors and Volkswagen planning to sign a pact to explore the possibility of working together to develop a new range of products.
In an interview to Ketan Thakkar on the sidelines of the Geneva International Motor Show, chief executive officer of Tata Motors, Guenter Butschek explains the logic behind the move, which includes current discussions ongoing with Germany’s Volkswagen Group for a possible tie-up.
The company is exploring various opportunities, including partnership in its new advanced modular platform (AMP) development, possibilities of a joint venture or a contract manufacturing with the German automaker, in its bid to scale up
Butschek said that they had several discussions so far and they are in the midst of a discussion and confirms about it in a good time, where they are deeply looking into technical details of the platform and how could the best of best solution look like.
He also added that it is something that we have to take it to next stage, which is deeper and see what are the potential opportunity and options for the partnerships.
Butschek said “The range of discussion is very wide, right from technical partnership to forming a joint venture, where you even put a production capacity in a JV, look at a contract manufacturing and there are plenty of opportunities between us. All of these will evolve further.”
Explaining the rationale behind such a collaboration, Butschek said although the company has set sights on becoming among the top 3 passenger vehicle makers in India by 2019, it might not be enough to get the scale up effects.
“Even if we get a large scale in the national business we might still not be up to the mark as far as scale effects are concerned,” he said.
“Therefore, we are, since a while, have been having intensive talks with different potential partners, who might join us on the AMP,” Butschek added.
It is intended at bringing additional volumes through the new platform that the firm will introduce to the market by 2018.
Experts say that the two groups stand to gain a lot from such collaboration. For Tata, it means having huge economies of scale on its side. It will also cut down the costs of developing the AMP platform. For Volkswagen, it will give a base in the Indian market it can hopefully exploit.
One of the world’s largest automakers, Tata Motors is still a small player in India, where its products are too expensive. Gaps in its portfolio, especially in the mid segment, have not helped it either. The company is striving hard to change the consumer’s view about the Tata Motors brand which was further hit by the Nano, the cheapest car in India.