Brands
Volkswagen open to giving Indian partner majority control in India
Skoda says MoU with potential partner could be signed within weeks
MUMBAI: Volkswagen is willing to let an Indian partner take the driver’s seat. Volkswagen Group is open to giving up majority control of its Indian operations as it moves closer to formalising an alliance with a local partner, with a memorandum of understanding (MoU) expected to be signed within weeks, according to an Economic Times report.
Skoda Auto CEO Klaus Zellmer told ET that discussions with a potential Indian partner are at an advanced stage, although he declined to identify the company or disclose the proposed ownership structure.
Skoda spearheads Volkswagen Group’s India strategy through Skoda Auto Volkswagen India (SAVWIPL). Zellmer said majority ownership was not a priority if a different structure could create a stronger and more successful business in India.
The comments come amid reports that the Sajjan Jindal-led JSW Group is in advanced discussions with SAVWIPL. The proposed arrangement could involve a new JSW entity focused on the Volkswagen-Skoda business, separate from JSW’s existing automotive ventures, including JSW MG Motor India and JSW Motors.
Zellmer said the proposed partnership is not driven by financial or operational distress. Instead, the objective is to create a business with greater scale and stronger local capabilities.
He said a standalone operation would remain smaller than one built alongside a strong Indian partner, adding that the company’s momentum and scale in India would be significantly greater with the right partner.
The ownership structure could also give the local partner a stronger role in strategic and operational decisions. Zellmer said a business model could be designed in which the partner with deeper knowledge of the Indian market has a meaningful say in running the operation.
Skoda had previously explored a potential joint venture with Mahindra & Mahindra, but those discussions eventually fell through. The carmaker subsequently revived talks with JSW Group as it looked to strengthen its India strategy.
The potential alliance comes as Skoda seeks to build on strong momentum under its India 2.0 strategy. The company has more than doubled its sales over the past two years, with the Kylaq compact SUV emerging as the biggest growth driver.
The Kylaq now accounts for more than two-thirds of Skoda’s volumes in India. More than half of its buyers are new to the Skoda-Volkswagen ecosystem, helping the brand expand beyond its traditional customer base.
Skoda, however, needs a broader product portfolio to sustain that momentum. The company plans to address more segments and powertrains, with a locally produced battery electric vehicle among its priorities.
Rather than rushing an imported electric vehicle into the market, Skoda is taking time to develop a product that can be locally produced and priced competitively.
The need for scale is particularly important as India’s passenger vehicle market expands. Skoda currently has less than 2 per cent market share, while the company expects the Indian passenger vehicle market to grow by 8 to 10 per cent in FY27.
For Volkswagen and Skoda, therefore, the proposed partnership is less about who owns the bigger slice and more about who can build the bigger business. If the MoU is signed as expected, the alliance could mark a significant shift in how the European carmaker approaches one of its most important growth markets.
