Mahindra & Mahindra (M&M) and Skoda Auto Volkswagen India (SAVWIPL), a wholly owned subsidiary of the Volkswagen Group in India, are close to finalizing a 50:50 joint venture aimed at sharing costs, technology, and vehicle platforms for future product development.
The collaboration, while including traditional fuel-based vehicles, will primarily focus on producing battery-powered SUVs for both Indian and international markets, according to sources familiar with the discussions.
An official announcement is expected by the end of the year. Mahindra declined to comment, and a SAVWIPL spokesperson stated, “We do not comment on speculation.” The venture will exclude the luxury brands Audi and Porsche from the Volkswagen Group.
Production will take place at the SAVWIPL and Mahindra plants in Chakan, near Pune. This development follows comments made by Skoda Auto’s global CEO, Klaus Zellmer, who noted significant progress in discussions regarding a potential equity partnership with an Indian company during a June briefing in Prague.
This joint venture represents a critical move for both companies. For Volkswagen, it marks a strategic effort to enhance its presence in India, the world’s third-largest automotive market, where it has struggled to compete due to high costs and stiff competition from Japanese, South Korean, and domestic manufacturers.
Despite over two decades in India, the VW Group, which includes Skoda, Volkswagen, Porsche, and Audi, saw its market share dip to 2.24% in FY24, selling 88,412 units, a 9% decline from the previous year. For Mahindra, the joint venture is part of a broader push into the electric vehicle (EV) market. The Indian automaker, known for models like the Thar, XUV700, and Scorpio, has committed INR 12,000 crore to its EV business over the next three years, alongside INR 14,000 crore for internal combustion engine (ICE) utility vehicles.
Mahindra’s new electric range, based on the INGLO platform developed in partnership with Volkswagen’s MEB components, is set to debut next year and is expected to account for 20-30% of its SUV sales by 2027.
The JV discussions, which began with a supply agreement for Volkswagen’s MEB platform and extended over two years before being finalized in February 2024, underscore the strategic importance of this partnership. As India pushes for greater adoption of electric vehicles and stricter carbon emission regulations, both Mahindra and Volkswagen are positioning themselves to meet these demands through this collaboration.
For Mahindra, this joint venture follows previous attempts at global partnerships, including a planned alliance with Ford Motor Co. that was called off in January 2021 and an earlier partnership with Renault that ended in 2010.
Under the leadership of CEO and MD Anish Shah, Mahindra has adopted a more disciplined approach to capital allocation, focusing on strategic partnerships that offer clear benefits. A potential joint venture with Skoda Auto Volkswagen represents a significant opportunity for both companies to strengthen their positions in the evolving automotive landscape. Puneet Gupta, director at S&P Global Mobility, described the potential joint venture as a major step forward for both Mahindra and Skoda Auto Volkswagen in India.
