Published on August 17th, 2022 | by Subhash Nair0
Volkswagen And Maruti Exploring Possible Strategic Alliance
Volkswagen might get the breakthrough it wants in India.
In many parts of the world, Volkswagen is seen as one of the dominant brands in the mass market. This is especially true in European markets, but for a time was also true in Mexico, South Africa and China. One big Asian market that hasn’t been able to crack is India. With a population of over a billion, it’s easy to understand why the German auto conglomerate wants a slice of the pie. So far though, the company has only managed to garner a market share of 2%, though 5% is projected by 2025.
One way that Volkswagen might achieve this sizeable increase in market share is through a strategic alliance with one of the subcontinent’s homegrown companies, Mahindra. Volkswagen was approached by Maruti’s first director, Sanjay Gandhi back in the early 1970s, but nothing came of it.
Now, the two automotive giants have signed an agreement whereby Volkswagen will supply EV parts for Mahindra’s upcoming electric vehicles. The Term Sheet covers supply of MEB electric components for an all-electric platform by Mahindra called INGLO. The agreement calls for more than a million units across 5 electric SUV models built by Mahindra. Volkswagen and Mahindra are also open to expand the agreement and explore other avenues of collaboration. There’s even talk of localisation of battery cell manufacturing as well as charging and energy solutions in India. So while the agreement probably isn’t going to put more Volkswagen vehicles on the ground, it will at least create some opportunities for Volkswagen to expand production capacity and make some money in the process.
Thomas Schmall, Volkswagen Group Board of Management member for Technology and CEO of Volkswagen Group Components, said: “We are happy that we have identified a larger scope of collaboration between our two companies. Together, Volkswagen and Mahindra can contribute significantly to the electrification of India, a huge automotive market with ambitious climate protection commitments. The MEB Electric Platform and its components are key to affordable sustainable mobility around the globe. The partnership not only demonstrates that our platform business is highly competitive, but also that the MEB is well on track to become one of the leading open platforms for e-mobility. We are thus delivering on the focus of our Volkswagen NEW AUTO strategy to make the platform business a strong pillar of our Group and to unlock future profit pools through economies of scale.”
Commenting on the announcement, Rajesh Jejurikar, Executive Director, Auto and Farm Sectors, Mahindra & Mahindra Ltd., stated: “The signing of the techno-commercial term sheet is a significant step forward in our partnership with Volkswagen. Our purpose-built INGLO platform offers unmatched potential for growth and further customization for developing new and innovative products, not just for India, but for global markets. Our vision is to lead the electric mobility revolution in India by bringing authentic electric SUVs with cutting-edge technology, as showcased in the UK today. We are very pleased to explore further areas of potential collaboration with Volkswagen and are confident that together, we will be able to shape an exciting electric future.”