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Volkswagen and Tata Motors end talks on car partnership

Cooperation talks between the German car giant and the Indian market leader about joint development of a car for emerging markets have ended 'amicably' because the pair couldn't achieve planned cost savings.

VW group's Czech subsidiary Skoda said Thursday the two carmakers had come to the conclusion that the strategic alliance would not be able to achieve "the technical and economic synergies in the desired way."

But the Czech carmaker, which was commissioned by its parent VW group to lead the talks, did not rule out the possibility for future cooperation with the Indian rival after the "intensive and constructive talks" in past months.

Tata Motors Chief Executive Günter Butschek - a German automotive and aerospace industry veteran who joined the Indian company last year - said: "We have evaluated the technical feasibility and degree of synergies for the envisioned partnership. We have concluded that the strategic benefits for both parties are below the threshold levels."

The collapse of the talks foils a VW effort to develop a cheap vehicle platform for Asian markets, after an earlier alliance with Japan's Suzuki also fell apart.

In March, Tata Motors and VW announced a Memorandum of Understanding (MoU) for a long-term partnership to explore joint development of products for customers in India and other markets.

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Embattled Indian market

Skoda was exploring a possible entry-level car platform together with the Indian manufacturer, using Tata's AMP vehicle platform as a basis, a VW group source told the news agency Reuters. 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.

Tata has been trying to turn round its loss-making domestic business by modernizing its products, improving efficiency and streamlining its organization.

India is expected to become the world's third-largest car market by 2020 but passenger vehicle sales have slowed in recent months due to policy changes and a new nationwide sales tax.

In May, General Motors (GM) said it would stop selling cars in India from the end of this year, drawing a line under two decades of battling in one of the world's most competitive markets where small cars make up the bulk of sales.

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uhe/kd (Reuters, dpa)

 

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