The German automaker has operated in the country for more than two decades but has struggled to expand its market share significantly.Volkswagen AG is in advanced discussions with JSW Group to sell a stake in its India business, with the Sajjan Jindal-led conglomerate seeking a majority holding in the venture, according to a Bloomberg report citing people familiar with the matter.
The report said the two sides are working towards a deal in the coming weeks under which JSW would invest in Skoda Auto Volkswagen India Pvt Ltd, the German automaker’s local subsidiary.
However, key issues, including the valuation of the business and the size of capital commitments from both parties, remain under discussion.
The report added that while senior executives from Volkswagen and JSW have held recent meetings, the negotiations could still fail.
Responding to Reuters, a spokesperson for Skoda Auto, which leads Volkswagen Group’s India operations, declined to comment on the reported discussions but said the company continues to evaluate growth opportunities in the country.
“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,” the spokesperson said.
JSW Group did not immediately respond to Reuters’ request for comment.
Long hunt could conclude
The proposed transaction would conclude Volkswagen’s long-running search for a local partner in India.
The German automaker has operated in the country for more than two decades but has struggled to expand its market share significantly.
According to the report, Volkswagen has become more open to ceding control of its India operations as it seeks to reduce the financial burden of expanding in the market.
Although the India unit reported higher profit in the year ended March 31, the parent company is said to be looking for a local partner to share future investments.
For JSW Group, the deal could provide access to Volkswagen’s vehicle platforms and create opportunities for broader collaboration with the European automaker, the report said.
Talks span nearly three years
Reportedly, both groups began discussions around three years ago. Earlier talks had focused on JSW using Volkswagen India’s manufacturing facilities in Pune and Chhatrapati Sambhajinagar, Maharashtra.
The report noted that Volkswagen had reduced its planned investment in a dedicated India electric vehicle platform to about $700 million, down from an earlier estimate of $1 billion, as it continued its search for a local partner.
Skoda has identified India as a key growth market outside Europe following Volkswagen Group’s exit from Russia and its scaling back of operations in China. Skoda Chief Executive Klaus Zellmer had earlier said the company would invest independently in India if it failed to find a suitable local partner.
Volkswagen Group, which operates the Skoda, Volkswagen, Audi, Porsche, Bentley and Lamborghini brands in India, accounts for about 2.5 per cent of the country’s passenger vehicle market, according to the Bloomberg report, below its target of 5 per cent market share by the end of the decade.
The group has previously explored partnerships with Indian automakers. Discussions with Mahindra & Mahindra did not materialise, while JSW already has a joint venture with China’s SAIC Motor, which markets MG-branded vehicles in India.
