Volkswagen and Tata end talks on emerging markets joint development

Tata Motors, Volkswagen's Skoda Auto to call off proposed alliance

Tata Motors, Volkswagen's Skoda Auto to call off proposed alliance

"The two companies have come to the conclusion that at the present point of time the technical and financial synergies cannot be understood in the desired method", Skoda stated, validating a Reuters story.

Cooperation talks between Germany's Volkswagen Group and India's Tata Motors about joint development of a auto for emerging markets have ended amicably, the two companies said on Thursday.

Skoda dropped the idea of establishing the AMP platform on fears that it would require considerable additional investment to fulfill future crash-test and engine emissions requirements and would rather explore parent VW's MQB platform for more possible savings, stated the source, who refused to be named.

"We have evaluated the technical feasibility and degree of synergies for the envisioned partnership".

An alliance with the German carmaker would have given Tata Motors, which has lost ground in India's competitive passenger vehicle market, access to advanced technology and could have helped both partners shave off development and production costs.

But Skoda did not rule out the possibility for future cooperation with Tata after the "intensive and constructive talks" in past months. In the quarter ending in June, the Indian operations of Tata Motors posted a net loss of 4.67 billion rupees compared with a 260-million-rupee profit a year ago.

The announcement to call off the proposed agreement comes amid mounting losses in Tata Motors' India operations and efforts to turn around the business by Butschek.

Both Volkswagen and Tata Motors are struggling to grow volumes in India, where market leader Maruti Suzuki is continuing to increase its dominance, while the likes of Honda and Ford are seen getting aggressive.

Both firms have had a patchy innings in a market that is poised to become the world's third largest by 2020. Talks included the joint development of vehicle components and concept cars.

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