Volkswagen In Advanced Talks With JSW Group Over Stake Sale In India Unit

Volkswagen AG is in advanced discussions with JSW Group for a potential investment in its Indian business, in a move that could bring a long-awaited local partner into the German automaker's operations in one of the world's fastest-growing automobile markets.

Bloomberg reported that JSW Group and Volkswagen are working towards a possible agreement in the coming weeks under which the Sajjan Jindal-led conglomerate would invest in privately held Skoda Auto Volkswagen India Pvt. Ltd.

JSW is reportedly seeking a majority stake in the venture, although negotiations remain ongoing.

According to Bloomberg, senior executives from both companies have recently held meetings, but key issues including the valuation of the business, the size of the proposed investment and future capital commitments are yet to be finalised.

The discussions remain confidential and could still fail to result in a transaction, the BBG report said.

Responding to queries from Bloomberg, a Volkswagen spokesperson said, "Volkswagen is constantly evaluating new business opportunities and various business options to implement its strategy in India."

"India is an important market for Skoda Auto's global growth plans," the spokesperson added while declining to comment on discussions with JSW.

India Strategy Under Focus

The proposed transaction would conclude Volkswagen's years-long search for a domestic partner as it seeks to expand its presence in India's passenger vehicle market. The German carmaker has reportedly struggled to achieve scale in India despite operating in the country for more than two decades.

Volkswagen had reduced its planned investment in a new India-focused electric vehicle platform to around $700 million from an earlier $1 billion, the BBG report said.

The Volkswagen Group, including brands such as Skoda, Volkswagen, Audi, Porsche, Bentley and Lamborghini, reportedly accounts for around 2.5% of India's passenger vehicle market, well below its target of reaching a 5% market share by the end of the decade.

According to the report, discussions between JSW and Volkswagen first began around three years ago and initially centred on the possible use of Volkswagen's manufacturing facilities in Pune and Chhatrapati Sambhajinagar.

More recently, the negotiations have broadened to include an equity investment, although several hurdles remain before any agreement can be concluded.

The report added that Volkswagen has become increasingly open to diluting its control of the India business as it seeks to reduce funding requirements while pursuing wider cost-cutting measures across its global operations.

Meanwhile, a partnership would provide JSW access to Volkswagen's vehicle platforms and could create opportunities for broader collaboration beyond India, as per BBG.