VW and Tata's plan to work together in India is called off

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

German Volkswagen, the world's number one automaker, signed a Memorandum of Understanding with Tata in March to jointly develop components or vehicles.

Four months after Tata Motors CEO and MD Guenter Butschek signed an MoU with Skoda-led Volkswagen Group to jointly develop a small auto platform, the partnership officially ended on Thursday. VW and Skoda had become sceptical about the AMP platform, which was not proving to be as cost-effective as expected, the magazine reported. But the idea had been dropped on fears that it would need significant further investment to meet future crash-test and engine emissions requirements, the source said.

"We have evaluated the technical feasibility and degree of synergies for the envisioned partnership". Tata Motors also asserts that it will continue to pursue its standalone product strategy to bring exciting and world-class products to its customers. 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 previous year.

Foreign carmakers like VW, General Motors and Fiat Chrysler have struggled in India where more nimble rivals such as Maruti Suzuki and Hyundai Motor 005380.KS have cornered two thirds of the market.

"The strategic benefits for both parties are below the threshold levels, " Guenter Butschek, chief executive and managing director at Tata Motors said in a statement.

The cooperation was to be focused on India, a market dominated by Tata Motors and low-priced cars on which Volkswagen has little presence, as well as other countries in the Indian subcontinent.

Tata has been trying to turn round its loss-making domestic business by modernizing its products, improving efficiency and streamlining its organization. VW "will now seek new synergies with Volkswagen's MQB platform", the source added.

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