Tata VW Alliance: Understanding The Future

Tata and Volkswagen Group AG have signed an MoU to explore the possibilities of developing products together. Strangely though Volkswagen has appointed Skoda to lead the project on behalf of Volkswagen group brands. So in essence the Mou has been signed between three companies. As a part of the agreement the Indian giant and the German carmakers will look to share technologies and expertise in areas the companies excel in.

Firstly, VW has been clear about Skoda sitting a rung below in the premiumness ladder and hence from a hierarchy standpoint, is the better fit to engage in this alliance.

Secondly, Skoda values itself on practical and spacious products. This DNA is also something that Tata’s offerings have also prided themselves on.  This combination might offer a greater rub-off  benefit to Tata’s as brand Skoda has a stronger emotive connect with the Indian car buyers.

Currently Tata has six platforms on which it makes its cars. Tata plans to bring its number of platforms to two. The AMP or the Advanced Modular Platform is one of them which was announced at the TAMO brnad launch last month. According to Tata, the AMP will make up 70 per cent of the cost of the vehicle. It can offer up to 80-90 per cent commonality between its products which means it could be quite cost effective. The AMP is scalable and can be adjusted for length, width, height, wheelbase and track. In addition it is also optimised for hybridisation and electrification. It can also be tailored to fit most body styles and Tata claims it can provide class leading luggage space as well. The AMP at this point seems to be  designed for front wheel drive applications.
However, Tata is developing a second platform that is expected to be for rear-wheel and all-wheel drive vehicles. Volkswagen, through Skoda, could choose to modify Tata’s highly modular and localised platforms to bring in a variety of affordable products for India. Or, it could even borrow the AMP platform altogether.

Tata could look to utilise VW’s immense knowledge to hone and better develop the AMP platform while the possibility of a jointly developed platform cannot be ruled out. Meanwhile Tata could stand to gain from VW Groups depth of knowledge in managing quality and bringing more technology, especially, hybrid power tech to the table. Though the terms of sharing tech are yet to be finalised but it would definitely entail Tata looking to benefit through VW’s technical know how.

Well, quite simply, VW cars could get more affordable, Tata cars could feel more premium. Thanks to the scalability of the platform it would be easier to make cars and have shorter turn around times as the platform can be modified to fit almost all types of vehicles from hatchbacks to SUVs. In addition, if Tata and VW agree to share engine tech it could result in Tata’s engines becoming more refined and VW could achieve a higher level of localisation. It could achieve that by making use of Tata’s local vendors for parts and components thereby further reducing initial and repair costs bringing down both the initial and the running cost of VW vehicles.

Not to mention it could also aid in bringing the price of spare parts down as well. For those wondering about the scope of hybrid and electric vehicles, it is way too early to be able to comment on the possibility of the two giants co-developing hybrid or electric cars. But given Tata’s claim of the AMP being electric and hybrid powertrain compatible, the two companies could look into the green cars at a later stage.

Finally, Tata is yet to announce its second platform which (we sincerely hope) if developed in collaboration with Volkswagen could help both companies make a serious dent in the Indian automobile industry.

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