M&M, VW put JV plan on hold
India’s auto major Mahindra & Mahindra and Germany’s Volkswagen Group are believed to have put their partnership/joint venture on hold. While both companies claim to be working on “long term feasibilities”, sources said the joint venture has been put in cold storage.
Sources said Skoda Auto Volkswagen India, which was leading the talks, is doing a “re-think”. The two companies have not been able to iron out differences, and Skoda is actively considering dropping out of the project.
“If both (companies) are not making profits out of the deal, it doesn’t make any sense. Everybody can go on their own way. Both companies are strong enough to mark their presence. Actually, for the customer, it is much better because they are competing in the market, and customers will get the best offer from both,” a senior executive privy to the development told businessline.
A partnership must be a ‘win-win’ for both the parties, a senior executive said, adding that both the companies need to see short- term gains and a common future together for a lasting partnership. The source further said that the biggest hiccup to the partnership is the financial joint venture for their growth.
Differences
The negotiations between the two companies on the 50:50 joint venture have been dragging on since last year. The companies are unable to finalise crucial terms after signing non-binding memoranda of understanding.
“Both sides need to see this venture not just from a product but also from a cultural perspective,” he said.
Citing an instance of the “cultural differences” between the companies, the official recalled the break up of the joint venture between VW and Suzuki in 2011 when the German company had nearly 20 per cent in the Japanese auto major but the relationship broke down within two years of the deal signing.
Cut to 2025, similar vibes are felt between M&M and Skoda VW, with both companies wanting their major contribution in the 50:50 JV.
Another source said the leadership of both the Groups had met at the World Economic Forum at Davos last week but no thaw in the relationship was observed. When asked, M&M said it was on a “silent period and will not be able to make any comment right now”.
EV gear supply
VW and M&M signed the first agreement in May 2022 to explore the use of components from VW’s MEB electric vehicle (EV) platform for Mahindra’s upcoming EVs. In September 2024, both signed the first supply agreement on components of the MEB platform for Mahindra’s purpose-built electric platform Inglo.
M&M is the first external partner to use the groundbreaking unified cell concept, the core element of Volkswagen’s battery strategy; they are used in Mahindra’s latest EVs — BE 6 and XEV 9e.
A Skoda Volkswagen India spokesperson said: “… are evaluating various options to ensure the best possible solution to implement our strategy in the highly dynamic Indian market… Volkswagen Group continues to explore multiple opportunities to expand the collaboration potential.”
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