Tata Motors set to become the bigger brother in tie-up with Volkswagen: Hormazd Sorabjee

The collaboration between Tata group and Volkswagen gives both the companies, a chance to rebuild their business ground up, Hormazd Sorabjee, Editor of Autocar India, explains in an interview with ET Now.

Edited excerpts:

Tata Motors is joining hands with Volkswagen, how do you view this relationship or this equation?

In terms of timing, it is actually perfect for both the groups because Volkswagen is really struggling in India with both, Volkswagen and Skoda brand.

Clearly, the writing on the wall is that it is very difficult to crack this market on their own and they would need a local partner to do it.

Also Read: Volkswagen India sells 3965 units in Feb 2017

As far as Tata goes, Tatas have also been struggling with its passenger car division. It is a company that is structured for massive scale historically, and right now they are selling about 12,000 cars a month which really is just not enough and we all know that the passenger car division is really the problem child in the whole group as far profitability goes.

Also Read: Tata Motors shares slip over 2% on soft Jan sales figures

So what this does with this tie-up with Volkswagen it gives them suddenly huge scale because inorganically it is difficult to grow and I think with this sort of partnership automatically a lot more possibilities are opened up not just in India but abroad as well.

Tata and Volkswagen both have their own operational platforms, like the Tata's AMP (Advanced Modular Platform) and Volkswagen has its own, MQB (Modularer Querbaukasten, German for 'Modular Transversal Toolkit'), so how are the two companies going to come together on the same platform?

That was the big debate between the two companies. Quite clearly the MQB is just too expensive for the Indian market, there is just too much cost in there and that is Volkswagen’s fundamental problem as well.

What has been decided is that they are going to go ahead with the AMP platform.

Volkswagen initially was not confident, there were two groups within Volkswagen, there are people saying that why should we use their platform. Then they got it validated by a third party, which is EDAG Engineering, an engineering firm,

They went through the mathematical models and the data for the AMP platform and came away quite impressed, especially in areas of structural rigidity and crashworthiness.

That sort of gave a thumbs up and I think that kind of convinced Volkswagen that they will go ahead with the AMP platform. Even more surprising is on engines one would expect Volkswagen, given their expertise in diesel engines, would be used, but that again is proving to be too expensive, the Volkswagen engines just have not been localised to a great extent and it looks like they might be using Tata’s new generation engines.

Really a lot of Tata input are actually going into Volkswagen rather than vice versa.

What Tata is getting out of it is Volkswagen’s electrical architecture which really is far better than what Tata Motors has and it is pretty cost effective too.

I would still be holding my breath because the cultural difference between the two companies is for me a bigger issue and a lot of things have to be resolved before we finally see products coming out of this alliance.