Rumour: Tata-VW Group alliance on the verge of break-up

Earlier this year, Tata Motors and the Volkswagen Group had announced an alliance for a product development partnership. Under this alliance, the two companies were expected to share technologies and build their respective products, based on Tata's AMP platform. However, according to some media reports, the alliance has now hit a road block and the two companies might soon officially call off the memorandum of understanding (MoU) they had signed earlier.

The chief reason behind this major development is being said to be the cost associated with using Tata's AMP platform for VW and Skoda cars. Reports suggest that it will cost around Rs. 1,000 crore for the Volkswagen Group to jointly develop and adapt its range of cars on the AMP platform. The German carmaker's engineers have reportedly suggested that with such an investment, they could develop and localize Volkswagen's own MQB-A platform for the Indian market.

Volkswagen and Skoda have always been skeptical about using the AMP platform for its products in India. With the costs involved, the company is now reportedly planning to shelve the idea and work on developing its own MQB-A platform for the Indian market.

On the other hand, Tata Motors too is looking to re-channelize its resources towards its commercial vehicle business, which has been showing signs of dropping sales numbers for the past couple of years. In May 2017, Tata's CV arm recorded a market share of 38.70%, which is the lowest figure ever recorded by the Indian manufacturer.

As a result, the two companies are said to be looking forward to end their alliance and go their own ways to develop budget-friendly platforms for India. An official announcement regarding the same is yet to be made.

Source: Autocar India