Tata Motors Might Build Cars for Volkswagen

They say that it’s never too late. German carmaker Volkswagen, finally seems to have realised the mantra to succeed in the Indian market -- small cars. And it reportedly is set to join forces with domestic car major Tata Motors in a bid to formulate a small-car development programme. 

A report by a German business magazine, Manager Magazin stated that Tata Motors might partially or fully develop a low-cost small car to be later sold under the Volkswagen brand in emerging markets such as India. However, the talks are still in their initial stages. 

Tata Motors, for now, chose to keep its cards close to its chest in the matter. “We regularly have discussions with different companies to explore future collaborations, but we do not have any specific announcements at present,” a company spokesperson said recently.

The German carmaker has, in the past, tried its hand at various such partnerships to manufacture compact cars, including the (in)famous one with Suzuki Motor Corp. The two-year-old alliance, though, ended in a rather ugly fashion after a case of breach of trust, in the year 2011. 

However, Tata Motors could just be the right partner for the Wolfsburg-based automaker, having cracked the Indian small car market. While it has successfully developed one of world's cheapest cars in the form Nano, it has also launched its latest hatchback – the Tiago – at an extremely competitive base price of Rs 3.2 lakh (ex-showroom).

As for the VW, its most affordable products in the Indian automobile market currently include the Polo hatchback and the recently launched Ameo compact sedan, both of which still cost north of Rs 5 lakh. 

With a dwindling market share and a latest trend of negative growth in India, an alliance with Tata Motors to build small cars could prove to be just what the doctor ordered for Volkswagen’s fortunes in the country.