Tata Motors and Volkswagen’s Czech Republic subsidiary Skoda have ended their talks on the development of a new car for the emerging markets. Volkswagen and Tata Motors signed a memorandum of understanding (MOU) in March this year for establishing a long-term partnership programme to jointly develop products Indian and customers abroad.
The latest move is seen as a blow to Volkswagen’s ambition to develop cheaper vehicles for the Indian market which would eventually end up in South East Asia’s booming car buying market.
The German automaker has a 2% market share in India, the fifth largest auto-market and Tata Motors has a 5% share in the market.
Recently, Volkswagen’s plans for a partnership in Japan with Suzuki Motor had also fallen apart.
In a statement, Skoda quoted saying: “it has assessed and evaluated a potential strategic collaboration with Tata Motors Ltd over recent weeks and months. In doing so, both companies have concluded that at present, 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. 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.”
Presently, Tata Motors plans to continue its stand-alone vehicle development in the market. For quite some time now, Tata Motors has been suffering losses. Recently, the company reported a loss of INR4bn ($60.5m) loss for the quarter ending in June.
In the past, Tata Motors partnered with Fiat to distribute the Italian automaker’s cars in India, but that did not work and the partnership came to stop in 2012.
