Matthias Müller, CEO of the Volkswagen Group, Guenter Butschek, managing director of Tata Motors, and Bernhard Maier, CEO of Skoda, have signed a memorandum of understanding for a "long-term" partnership to "explore strategic alliance opportunity for joint development of products".
The Skoda branch of the VW Group will be the leaders in the agreement, which will result in a product launch in the Indian market in two years.
The partnership has reportedly been under discussion for more than a year, with Volkswagen’s MQB-A platform suggested as the possible shareable architecture. However, it was deemed too expensive for the Indian market, so instead it's thought that Tata will use its own Advanced Modular Platform (AMP) to spawn a range of products as part of the alliance.
Tata will focus on engine development, because the Volkswagen Group's units are too expensive, and it is thought to be interested in using Volkswagen’s electrical technology as well.
The vehicles produced will target the Indian market, allowing Volkswagen and Skoda the only real possibility of making a meaningful sales impact in a country that is notoriously difficult to crack for non-domestic manufacturers. The deal will also allow Tata to save costs in developing its new platform.
"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," Müller said.