Indian conglomerate, Mahindra and Mahindra (M&M) is in advanced negotiations with Skoda Auto Volkswagen India Private Limited (SAVWIPL) according to a report in Autocar Professional. According to the report, it is believed that M&M is to acquire a 50 percent stake in SAVWIPL for a consideration of US$ 1 billion (Rs 8350 crore).

SAVWIPL which is the Indian arm of the German automotive giant Volkswagen group has been searching for partners in India for over one year now, as the German carmaker faces severe turmoil in their home market, Germany with talk of plant closures and is also suffering in their largest market, China thanks to the rise of local Chinese carmakers such as BYD.

The report also mentions that the transaction will include only the Skoda Auto and Volkswagen brands and not the other luxury brands such as Audi, Lamborghini, and Porsche in SAVWIPL’s portfolio.

According to sales data released by the Society of Indian Automobile Manufacturers (SIAM), combined sales for Skoda Auto and Volkswagen India in the domestic market from April to August 2024 accounted for less than two percent of the overall car market.

However, both brands export vehicles manufactured at the SAVWIPL manufacturing facility in Chakan.

In fact, Skoda Auto is on the verge of launching their new ‘Made for India’ compact SUV, the Skoda Kylaq by November 2024 according to some news reports.

In February 2024, Mahindra announced that they would be using Volkswagen Group’s ‘MEB’ platform for electric vehicles for their next-generation electric vehicles and would be using Volkswagen Group-developed ‘Unified Cell’ technology.  This would form the basis of new electric vehicles developed on Mahindra’s INGLO platform which are going to be launched from 2025 onwards. In a statement issued to the stock exchanges last evening, M&M said that both companies continued to explore “multiple opportunities to expand the collaboration potential.”

When questioned about the news item, a SAVWIPL spokesperson said, “ Škoda Auto is leading the India operations on behalf of the Volkswagen Group and its brands.  To fully explore the country’s growth potential, we are always considering new business opportunities and are evaluating various options to ensure the best possible solution to implement our strategy in the highly dynamic Indian market.  Earlier this year, Volkswagen Group and Mahindra signed a supply agreement on components of Volkswagen’s MEB for Mahindra’s purpose-built electric platform, taking a step further on a joint vision for e-mobility collaboration. Volkswagen Group and Mahindra continue to explore multiple opportunities to expand the collaboration potential.”