India’s Tata Motors has announced the signing of a memorandum of understanding (MoU) with the Volkswagen Group and its Skoda division, aimed at possible joint product development.

The agreement has been signed by Tata Motors CEO Günter Butschek, Volkswagen Group CEO Matthias Müller and Skoda Auto CEO Bernhard Maier.

Skoda Auto will take the lead on behalf of Volkswagen to drive the development of vehicle concepts in the economy segment.

“We are delighted to announce our potential cooperation with Volkswagen Group and Skoda,” says Butschek.

“We strongly believe that both the companies, by working together, can leverage from each other’s strengths to create synergies and develop smart innovative solutions for the Indian and overseas market. This is in alignment with Tata Motors’ efforts to make itself ‘FutuReady’ by embracing new technologies, fostering higher platform efficiency and offering solutions that connect with the aspirations of our customers.”

“Our aim with the envisaged strategic partnership with Tata Motors is to lay the foundations in the group and the brands that will enable us to offer customer-oriented mobility solutions in emerging, fast-growing automobile markets, as elsewhere,” adds Müller.

“By offering the appropriate products, we intend to achieve sustainable and profitable growth in very different parts of the world. That is why we are systematically pursuing our regional growth strategy.”

Tata Motors and Skoda Auto, representing the Volkswagen Group, will create the detail around the guiding principles and terms of cooperation in the next few months.

Following the successful completion of definitive agreements, the two companies will start joint development work and joint value-chain activities.

Based on this joint work, Tata Motors plans to launch products in the Indian market, starting in 2019.

Tata Motors has operations in the UK, South Korea, Thailand, South Africa and Indonesia. It also owns the Jaguar Land Rover brand. The group also has an industrial joint venture with Fiat, in India.