Mahindra, Skoda Likely To Sign Pact For Proposed JV Soon; Reflects A Significant Strategic Move

Mahindra & Mahindra and Skoda Auto Volkswagen India (SAVWIPL) are likely  to discuss forming a potential car manufacturing joint venture in India. The collaboration aims to share costs, technology, and vehicle platforms for future product development. Talks are progressing well, with a Memorandum of Understanding expected by late October or early November.

Volkswagen sales are on the downward swing since past few years as the Indian counterparts have become more robust in terms of sales. But being the second largest automobile market outside Europe, keeping India at bay is not an option. Mahindra & Mahindra and Skoda Auto Volkswagen India are finalizing a 50:50 joint venture focused on developing electric SUVs for the Indian and international markets, with production in Chakan, Pune.

JV will primarily focus on battery-powered SUVs but will also include fossil fuel-based models. An announcement is expected by the end of 2024. This JV marks a significant step for both companies amidst increasing government support for electric vehicles and stricter carbon emission regulations.

The partnership builds on prior agreements between VW Group and Mahindra, including the INGLO electric platform and supply agreements for components. Mahindra plans to invest ₹12,000 crore in its EV business over the next three years, with a goal to make 20-30% of its SUV sales electric by 2027.

Despite a long presence in India, VW Group’s market share has declined, making this collaboration crucial for its growth in the country.  M&M and Volkswagen Group’s wholly owned India subsidiary are in advanced stages of forming an equal JV to share costs, technology, and vehicle platforms for future product development.

The two companies plan to share the development cost of both EVs and ICE models. However, the focus will be on electric SUVs for India and the global market. The Skoda and Mahindra facilities at Chakan, near Pune, would be the production base for these models.

The VW Group has already agreed to share components of its MEB Platform with Mahindra. These will be used in the latter’s INGLO electric car platform, which will underpin the upcoming Born Electric models. However, there has been no official word yet from Mahindra or Skoda Auto Volkswagen India regarding reports of a new JV.