Tata Motors, Skoda-VW hit the brakes on tie-up

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

Tata Motors and Skoda Auto's Potential Partnership Talks Fail

"Besides other issues, there are a lot of cultural dissimilarities", said a person aware of the development, on the condition of anonymity.

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.

Volkswagen AG's Skoda division said talks with India's Tata Motors on a strategic alliance have ended because the two automakers failed to achieve planned cost savings.

Tata Motors on Thursday said a joint technical feasibility study found that strategic benefits for both parties were below the desired levels, although it has kept the doors open for future collaborations with the VW Group. "However, we remain positive of exploring future opportunities with the Volkswagen group".

Tata Motors, Butschek added, will continue to pursue its stand-alone product strategy to bring "exciting and world-class" products to its customers.

The companies signed a memorandum of understanding at the Geneva International Motor Show in March to develop economy vehicle concepts.

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Reports of the joint venture hitting a roadblock surfaced two months ago. If the plan materialised, it would have given Skoda access to Tata's AMP modular platform and the first auto to be built on the platform was expected to be rolled out in 2019.

An alliance with the German carmaker would have given Tata Motors access to advanced technology, and could have helped both partners cut development and production costs.

Tata has been trying to turn round its loss-making domestic business by modernizing its products, improving efficiency and streamlining its organization. It was first reported by Autocar India magazine.

The tie-up was expected to boost the fortunes of Tata Motors which is losing market share in passenger vehicles, - to 5.2% from 13.1% since FY 2011-12. But recent launches such as the Tiago compact vehicle, Tigor compact sedan and Hexa SUV has helped the firm regain some ground.

The German group is looking for new overseas markets as it struggles to draw a line under its emissions scandal.

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