Mahindra recently revealed that the company has signed an MoU with the Volkswagen Group to share electrical components for the development of its born electric cars. Now, a report reveals that the Indian automotive manufacturer could be planning to acquire a 50% stake in Skoda Auto Volkswagen India which could be valued at around USD 1 Billion. Also, sources reveal that the agreement and its details are likely to be announced soon by the brands.
Speculation is that this deal could be similar to the one between Mahindra and Ford which was amicably dissolved in the COVID-19 era. Also, sources reveal that the preliminary understanding between the two companies have been already reached and Mahindra insists of holding 50% stake otherwise the deal is a non starter. If the deal goes ahead, it will place Mahindra in a position where it will be able to access Skoda Auto Volkswagen’s global technologies which also includes its vehicle architectures.
On the other hand it will also enable Skoda Auto Volkswagen India to improve its manufacturing capacity along with access to Mahindra’s low-cost vehicle architecture for the future of internal combustion engines as well electric vehicles. The European brand will also be able to acquire developable land to expand its manufacturing which currently is 2.1 lakh units to about 10 lakh units in the future. Sources reveal that Mahindra could share its New Flexible Architecture (NFA) with Skoda-VW as part of the deal as well as contribute in cash. The company is also looking to expand the capacity at the Chakan plant with an investment of INR 4000 to 5000 Crores. However, the exact details of the manufacturing footprint are still scarce.
Also the deal could make an impact on the development of the next-generation Kushaq and Taigun models. Sources reveal that if the deal goes through the brand may shelve the MQB-AO-37 platform which has already overrun the cost target, and instead use Mahindra’s NFA platform with Volkswagen’s engine.
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