Tata Motors and Skoda cease discussions around potential partnership

Tata Motors and Skoda were speculated to develop a low cost hatchback for the Indian market.

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Skoda Auto has ruled out the strategic partnership with Tata Motors Ltd that it was assessing over recent weeks and months. The announcement came in today as both companies decided to call off the collaboration as currently neither the technical nor the economic synergies are achievable to the extent desired by both parties. As a result, the planned strategic alliance will no longer be pursued for the time being. Both companies also emphasised that following the intensive and constructive discussions over the last few months, they are not ruling out any possible future collaborations.

Commenting on this development, Guenter Butschek, CEO and Managing Director, Tata Motors, 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. However, we remain positive of exploring future opportunities with the Volkswagen group, given the relationship of mutual respect that we witnessed during the phase of our cooperation discussions.”

Tata Motors and Skoda were supposedly in talks with each other to manufacture a car from the upper hatchback segment. It was speculated that Skoda would use the low cost platforms from Tata to manufacture cost effective products in India and globally as well. In return, Tata Motors would use various technologies for engines and transmissions. Currently, Skoda does not sell a hatchback in India. The Skoda Fabia was discontinued long back after a price drop and low sales making it an unfeasible offering for the company. Skoda has been in the news today as it announced the Octavia RS, Kodiaq SUV and the Rapid Monte Carlo for India. The Kodiaq will be the new flagship of the Czech brand while the Octavia RS will be more of a halo product.

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