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Business

Tata Motors and Volkswagen Group halt partnership talks

Automakers leave option for future collaboration in India

MUMBAI -- India's Tata Motors and Skoda Auto, part of Germany's Volkswagen Group, have called off talks of a partnership that would have involved sharing manufacturing facilities and car platforms.

The companies said the sorts of collaboration discussed might "not yield the desired synergies" originally envisaged, but the door remains open.

"We have evaluated the technical feasibility and degree of synergies for the envisioned partnership," said Guenter Butschek, chief executive of Tata Motors. "We have concluded that the strategic benefits for both parties are below the threshold levels." Butschek said Tata Motors will continue to pursue its standalone product strategy.

The companies signed a memorandum of understanding at the Geneva International Motor Show in March to develop economy vehicle concepts. Subject to a more detailed agreement, the two companies would have worked on product development and sharing value chains with a view to launching products in India in 2019.

Tata Motors has already tapped some technology from its British subsidiary, Jaguar Land Rover, and hoped a tie-up with Volkswagen Group would help rationalize certain costs.

The proposed partnership was part of a turnaround effort by Butschek. In the quarter ending in June, the Indian operations of Tata Motors posted a net loss of 4.67 billion rupees compared with a 260-million-rupee profit last year. Revenue declined 11% to 92.07 billion rupees. In the same period, the company's overall vehicle sales fell 12% to 111,860 units, with trucks and buses particularly affected.

Car and sport-utility vehicle sales, on the other hand, grew 4.7%. After a long spell of poor performance in the passenger car segment, Tata Motors has enjoyed some success with its Tiago hatchback and Hexa sports utility vehicle.

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