JSW Group is planning to form a standalone entity to steer its proposed alliance with Volkswagen Group AG, which will operate independent of its existing car manufacturing partnerships. According to people aware of the matter, the new partnership will focus on mass-market VW and Skoda vehicles across internal combustion engine and new energy vehicles, with VW's super luxury marques — Porsche, Lamborghini, Bentley and Audi — excluded from the ambit. The proposed standalone company will transfer Skoda Auto Volkswagen India Pvt Ltd's (SAVWIPL) manufacturing plant at Chakan, Maharashtra, employees, vehicle platforms, sales and marketing operations, as well as exports and technology to the new entity. JSW aims for majority economic interest and leadership in the joint venture, with both companies targeting to sign an overarching memorandum of understanding (MoU) or framework agreement as early as in the next few weeks, or by September.
The Chhatrapati Sambhajinagar plant used for assembling Audi cars will also transfer to the new entity, which may be used for some of the high-end Skoda models in future. In October 2024, Aurangabad Industrial City welcomed JSW for what it said would be a $3.2-billion investment to make EVs and commercial vehicles, creating 5,200 jobs. Skoda currently sells the Kodiaq, Kushaq, Slavia and Kylaq models in India, while VW retails the Tiguan, Virtus, Taigun and Tayron. JSW has stressed it wants to be in the driver's seat in the new alliance, with VW believed to be keen to wrap up talks and sign an agreement by the end of this calendar year.
Volkswagen's global leadership is scheduled to visit Mumbai on August 18, with industry sources indicating the trip could culminate in the announcement of a strategic partnership with JSW Group. According to people familiar with the matter, the visit is expected to include a series of high-level meetings and is being viewed internally as the final step before announcing the proposed alliance. Multiple people familiar with the discussions told Moneycontrol that the leadership visit is likely to coincide with the announcement of Volkswagen's strategic partnership with JSW Group, negotiations for which have been underway for several months.
For the JSW Group, the proposed transaction would represent another major step in Chairman Sajjan Jindal's ambition to build a diversified automotive business. The deal will enable a brownfield push for ICE or internal combustion engine vehicles, which is said to be the next focus area to complete its passenger vehicles portfolio across segments namely green energy, hybrid and ICE models. The group already controls JSW MG Motor India and is separately developing its own passenger vehicle platform under the proposed JSW Auto brand. People familiar with the company's plans said JSW has also been exploring technology partnerships with global automobile manufacturers, including discussions with China's Chery Automobile, as it evaluates product architecture and technology options for its own automotive business.
Industry executives said a Volkswagen alliance would complement those ambitions rather than replace them. While Volkswagen would strengthen JSW's presence through an established global automotive brand, the proposed JSW Auto platform is expected to cater to a different strategic objective and product roadmap. If announced, the transaction would rank among the biggest strategic partnerships in the Indian automotive sector in recent years and provide Volkswagen with a renewed platform to expand in a market where it has struggled to build scale despite operating in India for more than a decade. The successful tie-up will resuscitate the flagging local operations of the European major, ending its more than three-year-long pursuit for a strong strategic local ally.
