VW, Tata Launch Non-Equity Partnership

Tata Motors Ltd. and Volkswagen AG have signed a memorandum of understanding to look for ways to swap vehicle platforms, components and technologies in India and other emerging markets.

VW’s Skoda unit will lead the alliance and set out guiding principles for the agreement over the next several months. Tata, Indian’s largest carmaker, says it intends to introduce products in 2019 that capitalize on the partnership.

Reuters notes that the agreement replaces VW’s failed small-car alliance with Suzuki Motor Corp. That equity deal, also intended to help VW develop more cost-effective techniques for small-car production, stumbled over cultural differences and ended with no result after eight years.

VW is eager to improve its sales in India and other emerging markets. Tata aims to streamline its automotive operations with fewer vehicle architectures and a greater sharing of components.