Volkswagen workers assemble VW Golf cars on a production line at the car maker’s plant in Wolfsburg, Germany. Picture: REUTERS
Volkswagen workers assemble VW Golf cars on a production line at the car maker’s plant in Wolfsburg, Germany. Picture: REUTERS

Volkswagen (VW) and Tata Motors called off plans to team up in India after five months, marking the German vehicle maker’s second failure to secure a partner for budget cars.

The anticipated cost savings and technical synergies from a tie-up fell short of expectations, the Indian car maker and VW’s Skoda unit, which was leading the talks, said on Thursday. While there is no deal for now, the companies said they could revive co-operation efforts in the future if the conditions arose.

"We have concluded that the strategic benefits for both parties are below the threshold levels," Tata CEO Guenter Butschek said in a statement. "However, we remain positive of exploring future opportunities with the Volkswagen group."

For VW, the end of the talks represents another setback in its quest to create vehicles thrifty enough to appeal to buyers in countries like India. VW’s previous attempt to conquer emerging markets through a small-car partnership with Japanese vehicle maker Suzuki unravelled in a bitter dispute that was settled just before the German company’s diesel-emissions scandal erupted in 2015.

VW and Tata announced plans in March to work together on market studies for developing mobility services, vehicle components and models, aiming to detail specific projects in the following months.

Car makers are forging partnerships as the industry comes under pressure from regulators, after several major, self-inflicted scandals and amid rising costs of developing cleaner cars to meet stringent environmental standards.

For Tata, which also owns the UK luxury brands Jaguar and Land Rover, an agreement offers access to VW’s massive global presence as it faces increasing pressure in India, where other global manufacturers including Fiat Chrysler and PSA are vying for customers.

Bloomberg

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