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The two automotive giants have officially announced that they are exploring the possibility of a collaboration to jointly develop vehicles for the Indian and overseas market. In the low-cost segment, Skoda is set to take the lead on behalf of the VW Group - the carmakers had signed a memorandum of understanding (MoU) to develop a new range of products that'll be shared by Tata, VW and Skoda brands. With this agreement, Skoda looks set to become the dominant brand in India again.
This deal will help the carmakers build scale, share costs and improve profitability. The MoU was signed by Guenter Butschek, Managing Director of Tata Motors, Matthias Muller, CEO of the VW Group and Bernhard Maier, CEO of Skoda Auto at the Geneva motor show 2017.
The companies will work on Tata Motors’ advanced modular platform (AMP) which can underpin cars and SUVs of various sizes and therefore result in better economies of scale. For Tata Motors, this deal will provide access to advanced tech from VW and will help bring down R&D costs significantly.
“The collaboration will bring their platform, their volumes also on the AMP to leverage the platform to a larger scale which will give us significant cost saving opportunities, improved competitiveness and the chance to profitably grow with the passenger vehicle business and make financially self-sustainable,” Guenter Butschek, CEO and managing director, said at the Geneva motor show.
Tata wants to bring down the number of platforms it uses from six currently to just two – one being the AMP platform. The second platform will be based on Land Rover’s L550 which underpins the Discovery Sport. The models to be based on the AMP will include hatchbacks, sedans, people movers and SUVs. Notably, according to Tata Motors, the commonality between the parts will be as high as 80 percent. “Economies of scale will come not just from the growth potential in Indian market. Hence the next angle of attack is also an international strategy since future products will be enabled for left-hand-drive markets due to AMP's modular structure,” Butschek added. The first product in India, out of this joint collaboration, will make its way here in 2019.