Tata-Volkswagen alliance may be called off

  • Published On: 29 June 2017
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The issue with sharing Tata’s AMP platform is proving to be more complicated than earlier anticipated.

The two companies, along with VW’s Czech brand Skoda, signed a Memorandum of Understanding in March at the Geneva motor show with the intent to explore a long-term cooperation to develop products together. The two companies intended to develop a common platform that would spawn bespoke products for each individual brand.

Initially, after much debate, Tata’s next-gen Advanced Modular Platform (AMP), which came with a cost advantage over VW Group’s MQB-A platform, was to be used by the group.

However, these plans have now stalled since both VW and Skoda have become increasingly skeptical about the AMP platform – it isn’t proving as cost-effective as expected. According to sources, for VW and Skoda to jointly develop and adapt the AMP to its own products, it will cost an estimated 140 million euros (around Rs 1,000 crore), and Skoda engineers have convinced top management that for this amount, it’s possible to develop and localise the MQB-A platform for India itself.

The MQB-A platform was working out to be too expensive for India. In our country, MQB-based products like the Tiguan, Octavia and Superb, and the A4, are all assembled locally from imported kits – there’s very little local content.

VW and Skoda’s high-volume cars are based on the now defunct PQ25 platform so it may have no choice but to invest in its MQB platform. “In the long term, it is better to develop our own platform as that gives us control of our destiny,” says a VW Group source.

Tata Motors isn’t showing keen interest either - the board feels it would be better to deploy resources and energies towards reviving its ailing commercial vehicle business. The company’s CV market share has been plummeting recently and is now at an all-time low of 38.70 percent in May 2017.

A Tata Motors spokesperson said, "We are currently in the phase of evaluating the potential cooperation based on technical feasibility and adequate levels of synergies. We will communicate concrete details of the outcome at the right time. Till then, it will be premature to disclose any information or respond to such speculations."

Tata’s first AMP-based car (X451), a premium hatchback, is due for launch in 2019.

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