- Volkswagen is in talks with JSW Group to sell a stake in its India business
- JSW may acquire a majority stake in Skoda Auto Volkswagen India Pvt. Ltd.
- Discussions began three years ago and cover valuation and capital investment
Volkswagen AG is in advanced discussions with India's JSW Group to sell a stake in its India business as the German automaker looks to bring in fresh capital and strengthen its presence in the country's fast-growing passenger vehicle market, according to Bloomberg.
The proposed transaction would see JSW invest in Skoda Auto Volkswagen India Pvt. Ltd., the entity that oversees Volkswagen Group's operations in India. According to the Bloomberg report, citing people familiar with the matter, the Sajjan Jindal-led conglomerate could eventually acquire a majority stake in the business, although discussions are still ongoing.
While both companies are working towards a deal that could be finalised in the coming weeks, several commercial terms remain under negotiation.
Volkswagen, JSW discussing strategic partnership
Bloomberg reported that senior executives from Volkswagen and JSW have held recent meetings as the two sides work towards a potential agreement. However, important issues such as the valuation of the India business and the amount of capital to be invested by each partner are yet to be finalised.
The discussions, which reportedly began nearly three years ago, initially focused on JSW gaining access to Volkswagen's manufacturing facilities in Pune and Chhatrapati Sambhajinagar, Maharashtra. The latest negotiations have expanded to include a broader strategic investment in the India business.
Volkswagen responds to report
A Skoda Auto spokesperson declined to comment on the reported discussions but reiterated that India remains a strategic growth market for the company.
"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 to the Reuters.
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Why India has become important for Volkswagen?
India has become a key market for Skoda Auto as the company seeks growth opportunities outside Europe following its exit from Russia and its gradual retreat from China.
Despite operating in India for more than two decades, the Volkswagen Group has struggled to build scale. Across brands including Skoda, Volkswagen, Audi, Porsche, Bentley and Lamborghini, the group currently accounts for around 2.5% of India's passenger vehicle market, significantly below its long-term target of 5%.
Even after launching India-focused products such as the Skoda Kylaq compact SUV, the company has found it difficult to compete against domestic leaders including Maruti Suzuki, Hyundai Motor India, Mahindra & Mahindra and Tata Motors in the price-sensitive market.
Why JSW could benefit?
For JSW Group, a partnership with Volkswagen could significantly strengthen its automotive ambitions.
The conglomerate already operates a joint venture with China's SAIC Motor, which sells MG-branded vehicles in India, and has announced plans to launch vehicles under its own JSW brand. A deal with Volkswagen could also provide access to the German automaker's global vehicle platforms, technology and engineering capabilities, creating opportunities for broader collaboration.
Volkswagen's broader turnaround strategy
The reported India stake sale comes as Volkswagen continues to optimise costs globally.
According to Bloomberg, the German automaker has become more willing to dilute its ownership in the India business as it looks for a local partner to share future investments. Although the India unit has improved profitability, the parent company is reportedly cautious about funding expansion on its own.
The company had also reduced its planned investment in a dedicated India electric vehicle platform to about $700 million from an earlier target of $1 billion.
While discussions with JSW are at an advanced stage, the proposed transaction is yet to be finalised, and the deal could still change or fail to materialise if the remaining commercial issues are not resolved.
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