JSW eyes majority stake in Volkswagen's India unit: Report
What's the story
Volkswagen AG is in advanced talks with JSW Group for a potential stake sale in its Indian unit, as per Bloomberg. The move comes as part of the German automaker's strategy to bring in fresh capital and strengthen its presence in one of the world's largest automotive markets. The discussions are said to be confidential and are expected to culminate in an agreement within weeks.
Stake acquisition
JSW eyeing majority stake in Skoda Auto Volkswagen India
The Sajjan Jindal-led JSW Group is reportedly eyeing a majority stake in Skoda Auto Volkswagen India Pvt Ltd, a wholly-owned subsidiary of Volkswagen.
The move comes as part of the conglomerate's plans to expand its footprint in the automotive sector.
However, key issues such as deal valuation and capital investment by both parties remain unresolved at this stage.
Market challenges
Volkswagen's struggle to scale operations in India
Despite being present in India for over two decades, Volkswagen has struggled to scale its operations.
The company currently holds a mere 2.5% share of India's passenger vehicle market across its various brands such as Skoda, Audi, Porsche, Bentley, and Lamborghini.
This is far below the 5% market share target set for the end of this decade.
Business expansion
JSW's existing ventures and expansion plans in automotive sector
JSW Group already has a joint venture with China's SAIC Motor Corp which sells MG-branded cars in India.
The conglomerate also plans to launch its own JSW-branded cars in the Indian market.
These existing ventures and future plans indicate JSW's aggressive expansion strategy in the automotive sector, making it a potential partner for global players like Volkswagen.
Past negotiations
Previous talks with Mahindra & Mahindra
Prior to this, Volkswagen had also held talks with Mahindra & Mahindra Ltd. for a potential partnership.
However, those discussions reportedly fell apart over differences in development costs and culture.
Despite a jump in profit for the year ended March 31, the European parent company is wary of funding its Indian business without a local partner to share the load.