Mahindra close to acquiring 50% stake in VW India

Mahindra and Mahindra Ltd (M&M) is said to be close to acquiring a 50% stake in Skoda Auto Volkswagen India Pvt. Ltd.

Board members of Mahindra and the Indian arm of European auto company are scheduled to meet shortly in Mumbai to discuss the potential joint venture or memorandum of understanding (MoU), The Economic Times reported, citing an unidentified company official aware of the developments.

The joint venture may include sharing of costs, technologies, and vehicle platforms but will exclude sedans, sport-utility vehicles (SUVs), and premium brands such as Audi, Porsche, and Lamborghini, the report said.

Mahindra and VW Group continue to explore multiple opportunities to expand the collaboration potential, the company that makes Scorpio, Thar and Bolero said in a statement.

“In case there are any concrete outcomes with regard to any of the aforementioned discussions, appropriate disclosures will be made in a timely manner as per the norms under the listing regulations,” it added.

Skoda Auto Volkswagen India said it continues to “explore multiple opportunities to expand collaboration potential” with Mahindra.

“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,” it said in a statement.

“Earlier this year, Volkswagen Group and Mahindra signed a supply agreement on components of Volkswagen’s MEB for Mahindra’s purpose-built electric platform. Volkswagen Group and Mahindra continue to explore multiple opportunities to expand the collaboration potential,” it added.

MEB, or modular electric drive matrix (from the German Modularer E-Antriebs-Baukasten), is a platform developed by Volkswagen for electric vehicles.  Volkswagen and Mahindra have signed the first supply agreement on components of the latter’s MEB mix for Mahindra’s purpose-built electric platform Inglo . The deal covers the supply of certain electric components as well as unified cells.

Earlier this week, Autocar Professional reported that Skoda Auto Volkswagen India is looking to sell 50% of its stake to M&M, with company valued at up to $1 billion. Skoda’s management is in India to negotiate a deal and both parties have reached a preliminary understanding, the report added.

If the JV materializes, M&M will gain access to SAVWIPL’s manufacturing capacity of 300,000 units annually, alongside the European brand’s technological prowess and global systems.

SAVWIPL will benefit from Mahindra’s cost effective platforms for internal combustion engine (ICE) and EVs with an annual capacity of 840,000 units, which could extend joint production capacity to 1 million units annually.

Skoda Auto Volkswagen had announced plans to invest €1 billion in India as part of its India 2.0 strategy.