Mahindra And VW-Skoda Partnership Talks Stall Over Key Disagreements

Earlier this year, Volkswagen Group and Mahindra & Mahindra engaged in concrete discussions regarding a potential partnership for passenger vehicle production in the domestic market. As the talks progressed, the indigenous automaker expressed interest in acquiring a 50 percent stake in Skoda Auto Volkswagen India (the Indian arm of the VW Group), which was estimated to be valued at around USD 1 billion.

Exploration of Electrification Opportunities

Gradually, both companies also began exploring a joint venture in the electrification segment, focusing on the development of a compact EV based on VW’s MEB21 architecture. However, this project was later scrapped as Mahindra appeared uninterested in pursuing the JV.

Proposal of the CMP21 Architecture

SAVIPL (Skoda Auto Volkswagen India Pvt Ltd) reportedly considering a cost-effective, all-electric CMP21 (China Main Platform) architecture as an alternative. The China-sourced CMP21 platform is relatively more affordable than the MEB21 and has a shorter development timeline. However, Mahindra & Mahindra hesitated to adopt this proposal due to significant overlap with its own upcoming born-electric SUV range.

Additionally, the CMP21 platform, with its lower ground clearance, does not align with Mahindra’s SUV strategy, which prioritizes class-leading ground clearance.

Current Status of Negotiations

The latest update on this matter reveals that negotiations between the two business groups for the potential 50:50 JV have stalled due to disagreements on key issues. The OEMs have failed to reach a common ground on critical aspects of the partnership. However, Mahindra and SAVIPL have already signed a series of non-binding MoUs (memoranda of understanding) on multiple business subjects in the past few months.

While agreements on some important matters were expected to be finalized by the end of this month, Mahindra is reportedly unwilling to proceed further, certainly its strong market position. The indigenous automaker appears reluctant to compromise on sourcing and development costs.

Official Silence

That said, there has been no official word from the companies on the current status of the negotiations.

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