Volkswagen has announced a non-binding memorandum of understanding to explore a strategic partnership with the JSW group to improve competitiveness and profitability in India's passenger car market. According to reports from Business Standard, the partnership structure is expected to see JSW taking a majority 51% stake in a joint venture, with Volkswagen retaining the remaining 49%. While no official details have been released, detailed discussions on valuation are currently underway between the two parties.
Despite entering India in 2002 with the Skoda brand, Volkswagen has struggled to establish a significant presence in the competitive Indian market. As reported by Business Standard, the German automaker currently holds a market share of just over 2%, with figures from the Society for Indian Automobile Manufacturers (SIAM) showing 2.10% market share between April-August 2026. The company's ambitious plan to achieve 10% market share within four to six years following the 2009 launch of the Volkswagen Polo has not materialized, with the target being reduced to 5% by 2025.
For JSW, the partnership represents a logical expansion of its existing automotive portfolio. According to Business Standard, the group currently has collaborations with Chinese companies SAIC and Chery for products and technology, but partnering with Volkswagen will mitigate the risk of depending solely on Chinese suppliers. The company is building its own capacity through JSW Motors, which is establishing a new plant in Sambhajinagar, Maharashtra, capable of producing 500,000 cars annually and expected to be operational by November. The JSW-MG Motors joint venture is also increasing capacity and pushing localization from 30% to 80% in the next 16 months.
The partnership comes as Volkswagen faces challenges globally, having lost its number one position in China to BYD in retail car sales and facing tough competition from Chinese car companies in Europe. As reported by Business Standard, the company's turnaround plan until 2030 involves cutting 100,000 jobs and halving its model portfolio. The collaboration could potentially leverage India's manufacturing cost advantages, with B V R Subbu, former president of Hyundai Motors India, suggesting that JSW could use Volkswagen's platforms and potentially export products to the EU under the India-EU free trade agreement.
