Volkswagen Group has signed a memorandum of understanding with Tata Motors to explore cooperation in India, sources close to the matter said, as VW takes a fresh attempt at conquering low-cost markets.
After months of talks, the carmakers have signed a memorandum of understanding to deepen exchanges in areas related to technology, components and platforms, and analyze overlaps that could come from cooperation, one of three company sources said, Automotive News Europe reported.
VW is embracing electric cars and looking for new markets as it battles to recover from its diesel emissions scandal. A previous attempt by VW to expand in emerging markets through an alliance with Suzuki Motor collapsed in 2015 after a fierce dispute.
Tata Motors, owner of British luxury carmaker Jaguar Land Rover, is restructuring its car business in India to cut its number of platforms to two from six to boost production efficiencies, and adjust more quickly to market trends.
“We confirm that we are in talks with VW for a potential alliance but an announcement will be made at an appropriate time,” a spokesman for Tata said.
A VW spokesman said it was discussing ways to expand its product portfolio with tailor-made solutions in India with both its car brands and potential partners.
With a very low vehicle penetration rate, India, the world’s second most populous country, is considered highly attractive by western carmakers as they search for growth.
Light vehicle sales in India are expected to more than double to 7.1 million cars by 2025 from 3.4 million last year, according to IHS Markit.
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