Automotive - - Mar 11,2017
The MoU aims to achieve sustainable & profitable growth and jointly manufacture auto parts and vehicles for the Indian subcontinent and beyond.
Tata Motors, India’s second largest automobile manufacturer has signed a Memorandum of Understanding (MoU) for a long-term partnership with Volkswagen Group.
The MoU will explore strategic alliance opportunities between the two companies like developing components and most likely new vehicles. Volkswagen’s Skoda would lead the project. In the next few months, the two companies will work out the guiding principles and terms of cooperation.
The announcement of alliance came when both automakers are suffering in the Indian market. Where Maruti & Suzuki and Hyundai control two-third of the market.
Volkswagen CEO Matthias Mueller said that the alliance would help to achieve sustainable and profitable growth in different parts of the world.
Volkswagen has already become the biggest automaker in China by sales. It is now adopting new technology and is looking for new markets as it tries to recover from the dieselgate scandal.
India, with increasing spending capacity of its middle class, is all set to become the world's third-largest automaker, behind the United States and China by 2020.
Its increasing auto sales and a huge population have attracted almost all foreign players including Chrysler, Citroen and France's Peugeot.
Volkswagen’s biggest rival, Toyota, is also looking for forming a partnership with Japan's Suzuki, which has a lot of experience of small cars in India.
India is a hard nut to crack for many foreign auto mobile manufacturer. It has dynamic demand trends and changing customer preferences.
Foreign automakers like General Motors and Ford Motor Co. have struggled in increasing sales in India and are now going to export cars from India in order to utilize idle manufacturing capacity.
Even domestic automakers like Tata and Mahindra have struggled to adopt the changing demand trends in India.