VW Group and Tata Cease Partnership Talks

Today Tata and VW Group announced that their prospective partnership, announced in March 2017, would no longer proceed. It was a short-lived attempt at a major automotive alliance. It appears that the automakers failed to identify the expected technical or economic synergies and that partnership talks are over.

Both VW and Tata were looking forward to the alliance for the opportunity to build new models, develop technologies, and increase market share. A source in the VW Group told the news agency Reuters that VW’s subsidiary, Skoda, was looking at a possible budget car platform together with Tata. Tata Motors CEO Guenter Butschek stated, “We have concluded that the strategic benefits for both parties are below the threshold levels [necessary to proceed with the partnership], however, we remain positive of exploring future opportunities with the Volkswagen group.”

For VW, this disappointment is the second hit in its attempt to develop an entry-level vehicle for the Asian markets, following the collapse of its earlier alliance with Suzuki.  Along with this latest development, Volkswagen continues to experience a financial hangover from the diesel emissions crisis, and its stock price continues to languish at roughly €129 per share which is not far from the 52-week low of €122. Tata Motors has been struggling with passenger vehicle sales, which were 5% lower year-over-year in June. Tata Motors ADR, trading on NYSE, fell almost 5% on the news to hit a 52-week low of $29.66. It appears, for now, neither partner has achieved technical or economic success.

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