VW is in talks with Tata Motors in order to develop a budget small car
Tata is known for its budget friendly vehicles like the Nano and Tiago
The budget small car is targeted at emerging markets like India and China
A recent report from a German magazine suggests that Volkswagen AG is in talks with Indian auto giant Tata Motors for the latter's help to develop a new budget small car. According to sources inside Volkswagen's Wolfsburg headquarters, Tata is expected to develop the new model either completely or partially for the Beetle maker and has been internally codenamed as 'Economy Car'. The budget small car is targeted at emerging markets like India and China, and would finally give the German car maker entry in the highly competitive entry-level small car market.
This, however, isn't Volkswagen's first attempt at building a budget car. The automaker has been working on the project for years on its own but was not able to meet the budget restrictions whilst maintaining VW's prescribed standards of quality. The development of the model was repeatedly stopped in the past. Nevertheless, the Economy Car project seems to have been kick-started again with brand chief Herbert Diess taking responsibility of the project at VW. Discussions on the development with Tata are being driven by corporate strategy chief Thomas Sedran.
Tata Tiago
Former Volkswagen CEO Martin Winterkorn had confirmed last year that the automaker plans to add a 13th brand to the VW Group, which would be introduced in the Chinese market. It is likely that the Economy Car will be introduced under this brand at least in China, while India could get it with the VW moniker. As for Tata Motors, the Indian automaker is known for its small budget friendly cars with its finest example being the Nano, which made the world sit up and take notice of its manufacturing capabilities having first sold the car for just Rs. 1 lakh (ex-showroom).
In recent times, Tata managed to replicate its lean manufacturing capabilities with the recently launched Tiago as the hatchback offers a host of features, appreciative design and practical engine for a competitive price tag. Volkswagen can certainly learn from the Indian auto giant about budget manufacturing and working around costs in order support its Economy car plans. More details on the collaboration can be expected in the following weeks.
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