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VW and Tata plan strategic alliance

March 10, 2017

German carmaker Volkswagen and India's Tata Motors have announced plans to forge a strategic partnership in the subcontinent. The idea is to jointly develop parts and concept vehicles and conquer new markets.

Skoda Rapid
Image: AP

Europe's and India's largest auto manufacturers signed a memorandum of understanding on Friday to unite their expertise in developing joint vehicle components "and even possible concept cars."

Working with Tata Motors would offer German automaker Volkswagen "specific market knowledge as well as local development expertise," a joint statement said.

While the path to neighboring China is well-trodden by Western carmakers, India still offers plenty of room for expansion.

Annual car sales in the Asian giant are expected to double from just under 3 million in 2016 to more than 6 million in 2030.

Huge potential

"Even before 2020, India's car market will be bigger than Germany's," industry expert Ferdinand Dudenhöffer of Germany's CAR automotive research center told the AFP new agency.

But he warned that a different approach was needed in India to be successful long-term. He explained that Indian buyers preferred affordable budget cars, while Chinese drivers were most interested in high-tech features like internet apps and mobile connectivity.

VW subsidiary Skoda, which operates an Indian plant in Aurangabad, is to take the lead in working with Tata, hammering out the details of the future partnership in the coming months.

VW already turns out its own-brand cars at a facility in Pune and has several sites belonging to truck units MAN and Scania.

hg/jd (dpa, AFP)