New Delhi: Indian auto industry may be about to enter into one of its largest collaboration efforts in years. JSW Group is said to be advancing in its discussions for a potential joint venture with Skoda Auto Volkswagen India which may bolster both the companies’ presence in the brisk Indian passenger vehicle market. The memorandum is not binding and it is expected that a final MoU can be signed in the next two months according to the reports.
Reportedly, JSW will establish a new special purpose entity to run this joint venture and not join its current automotive ventures. The fact that Volkswagen is being viewed as a long-term investment rather than a business investment is demonstrated by the porches.
The proposed joint venture will be used to produce future VW and Skoda cars in India, particularly electric vehicles (EVs), with a heavy emphasis on localisation and export. It is reported that JSW might own a majority stake in the joint venture, thereby exerting the operational control in the company and Volkswagen would bring its global technology platform, vehicle technology and engineering expertise to it.
A Bigger Vision Than Just Selling Cars
This acquisition would seem to be a component of a greater automotive plan for JSW. The group has been making a strong push into the mobility segment over the last several years with a collaboration with MG Motor India, its battery manufacturing plans, and investments in EV infrastructure. JSW would benefit by having its name associated with another major global vehicle maker and beefing up its product offering in various vehicle categories going forward.
The experts believe that the company is trying to develop an entire automotive ecosystem in India – ranging from manufacturing, battery, exports to future mobility solutions. Successful, JSW could be one of the most significant automotive players in India.
What Volkswagen Gains
JSW’s association with Volkswagen can address a few issues that Volkswagen is facing in India. The German carmaker’s record of large-scale growth has been at odds despite having a popular car in both of its brands, Volkswagen and Skoda.
A fast decision maker, local sourcing, cheaper production cost, and enhanced ease of expansion of the manufacturing plants are some advantages of a robust Indian partner. This will also help power cars become cheaper in future, as it will create more opportunity to compete with their rivals like Tata Motors, Mahindra, Hyundai and Maruti Suzuki in India’s booming electric car market.
What It Means for the Industry
Such a deal could turn out to be one of the biggest automotive tie-ups in India in recent times. This would also create a greater competition for two sectors: petrol and electric.
The alliance to the benefit of the consumers will offer them more local Volkswagen & Skoda models at an affordable price, along with export of Indian models. Besides, it helps the “Make in India” initiative of the government by boosting local manufacturing and the usage of less imports.
We have no official information yet on what the ultimate structure of the joint venture will be, but direction is definitely getting clearer. JSW isn’t just spending money on another car company, it seems it’s laying the groundwork for an empire of cars. If the partnership is likely to happen, it’s expected that VW will change the future of the brand in India and JSW will become one of India’s biggest players in the automotive sector.
