Mahindra & SAVWIPL to make official announcement by the end of this year
Mahindra and Skoda Auto Volkswagen India are reportedly in the final stages of establishing a 50:50 joint venture. This collaboration aims to share costs, technology and vehicle platforms for future product development, with a particular emphasis on battery-powered SUVs. The move is seen as a significant step forward in the rapidly growing electric vehicle market in India and beyond.
Strategic Focus on Electric SUVs
The proposed joint venture will primarily focus on the development of electric SUVs, targeting both the Indian and international markets. However, the scope of the partnership will also include fossil fuel-based models. Multiple sources close to the discussions have indicated that an official announcement could be made by the end of the year. While Mahindra has not commented on the matter, a SAVWIPL spokesperson stated, “We do not comment on speculation.”
The collaboration will leverage the production facilities in Chakan, Pune, which are currently operated by both SAVWIPL and Mahindra. This strategic location is expected to play a key role in the production of the new electric models.
Background and Implications
This development follows months of negotiations, both virtual and in-person, between the two companies. The association between the Volkswagen Group and Mahindra initially began with a supply agreement for components of Volkswagen’s MEB platform, which will be used in Mahindra’s INGLO platform. The INGLO platform will underpin Mahindra’s upcoming Born Electric (BE) models, which are set to roll out starting next year.
Mahindra has announced plans to invest Rs. 12,000 crores in its EV business over the next three years, with an additional Rs. 14,000 crores allocated for the development of internal combustion engine based utility vehicles. The company, known for popular models like the Thar, XUV700 and Scorpio, expects its new electric range to account for 20-30% of SUV sales by 2027.
For the Volkswagen Group, this joint venture represents a crucial step in bolstering its presence in India, the world’s third-largest automotive market. Despite over two decades of operations in the country, the group, which includes brands like Skoda, Volkswagen, Porsche and Audi, has struggled with a small market share, which stood at 2.24% in FY24.
The collaboration is seen as a response to the Indian government’s increasing push for electric vehicles and stricter carbon emission regulations. Skoda Auto has also identified India as its second most important market outside Europe, following a slowdown in China and its exit from Russia. This joint venture could provide the group with the local expertise and cost advantages needed to compete more effectively in India.
Historical Context and Future Outlook
This would not be Mahindra’s first attempt at forming a joint venture with a global carmaker. Previous attempts, including a planned tie-up with Ford Motor Co. that ended in 2021 and an earlier partnership with Renault, which concluded in 2010, were unsuccessful. However, under the leadership of CEO and MD Anish Shah, who took over in 2021, Mahindra has adopted a stricter capital allocation strategy, making this new partnership a potentially transformative move for the company.
Puneet Gupta, Director at S&P Global Mobility, remarked, “A joint venture would be a big leap for both Mahindra and Skoda Auto Volkswagen in India.” As both companies navigate the evolving automotive landscape, this collaboration could mark a significant milestone in their respective growth trajectories, particularly in the rapidly expanding EV segment.
