Tata Motors MD Guenter Butschek explains why the company is scouting for partners

Swaraj Baggonkar

Moneycontrol News

Three months after calling off the deal with Volkswagen and Skoda, India’s fifth largest carmaker Tata Motors is scouting for a partner who can provide scale and technology which the company believes are vital for future growth.

Speaking to Moneycontrol on the sidelines of the Nexon launch Tata Motors Managing Director Guenter Butschek said, “We are still open (for collaboration). We are still seeking opportunities. We have no immediate replacement for Volkswagen and Skoda. Whatever the new opportunities are going to be it needs to meet two criteria – scale and technology.”

The partnership of Tata Motors, Volkswagen and Skoda could not materialize into something concrete because of lack of synergies in product possibilities and product DNA. Volkswagen could not agree to the next generation vehicle platform developed by Tata Motors and neither could it compromise and reduce the costs on its own platform.

Tata Motors’ idea was to exploit the advance modular platform (AMP) which it has indigenously developed, and on which products will be commercially launched starting mid-2019. The company intends to share the platform with a partner who can build own products thereby, bringing sizeable scale of volumes.

"The partnership with VW and Skoda was about leveraging the AMP, preparing for economies of scale. And even if we get this on our own platform let’s say to 500,000 vehicles the disproportional allocation of volumes just in the Indian market we would not be even in reach to the scale game that some of our competitors play at the global level. And this need for scale has not disappeared and the question is how much scale can we generate by producing more models from just two platforms, lower investments leveraging volumes, it has its limits," added Butschek.

Tata Motors decided to get rid of each of the six platforms that are in use and replace them with just two platforms from the AMP family. These will house a number of models catering to different product segments to meet the volume targets.

In addition to volumes Tata Motors is hunting for technological support which it can use to meet future challenges in mobility solutions. These are in areas of electric, hybrids, emission norms and alternate fuels.

“Access to new technology was the other thing (for which we looked at an alliance with VW). Because we are not a multi-national player we don’t have Bharat Stage VI, electric vehicles and alternate fuels technology. The technology part was also one of the elements in the equation seeking for future collaboration partner”, added Butschek.

Tata Motors currently has not been approached by any foreign manufacturer for collaboration. “We have not been asked yet by Chery so I can’t offer any comment on that," added Butschek. Chery is the state-owned car and mini-van maker who is the tenth largest in China.