Volkswagen has moved closer to bringing an Indian partner into its operations as the German carmaker looks for greater scale in the world’s third largest car market. Skoda Auto’s CEO Klaus Zellmer has confirmed that the group is in discussions for a domestic alliance and a deal is expected to be concluded before the end of this year.
JSW Group has emerged as the likely candidate and the potential partnership comes as Volkswagen embarks on a product expansion phase, keeping in mind tighter emission regulations from 2027 and a more regionally based global strategy. The search for a partner began in 2022 after Volkswagen’s earlier discussions with Mahindra did not progress.
Zellmer has indicated that Volkswagen remains open to giving up control of its Indian operations if a strong local partner can consolidate the business. JSW has emerged as a notable candidate given its growing automotive ambitions, existing involvement in MG Motor through SAIC and a separate agreement involving Chery.
A partnership could also help Volkswagen share the investment required for new products, manufacturing capacity and bring in latest technologies. Volkswagen needs that additional scale after more than two decades in India. Skoda and VW together account for less than 3 per cent of the domestic car market while the German brand holds around 1 per cent compared with its peak of 3.46 per cent in 2011.
The group sold 1,15,239 vehicles in India last year, registering 35 per cent growth while Skoda reached a record 72,700 units. The Kylaq has played a key role in Skoda’s recent growth, and the brand has also remained ahead of Volkswagen in group sales during the first half of 2026. A sub-four-metre SUV will be one of Volkswagen’s biggest moves to improve its position in India.
The model is scheduled for 2027 and will be based on the heavily localised MQB-A0-IN platform developed in India. Thomas Schäfer, CEO of Volkswagen Passenger Cars, has described entry into the sub-four-metre category as essential for achieving greater scale in the country. Volkswagen is also assessing BEV, CNG and flex-fuel technologies for its future portfolio.
The company already exports vehicles from India to more than 40 countries while the country’s manufacturing and engineering capabilities have become increasingly important to the group. Schäfer has pointed to India’s cost-efficient manufacturing base, engineering talent and technology capabilities as reasons to expand its role.
The forthcoming free-trade agreements could further bolster exports while a potential India-Europe FTA could also create scope for selected imported models that may not justify local production. Volkswagen is simultaneously changing how its brands share technology. The group has acknowledged that earlier cost-cutting efforts resulted in Volkswagen, Skoda and Cupra products becoming too similar – weakening the distinction between their identities.
Future models will continue to share platforms and components underneath but greater separation will come through exterior design, interiors, driving characteristics and brand positioning. The Volkswagen counterpart to the Skoda Kylaq is expected to follow this approach with substantial engineering cooperation while giving buyers clearly differentiated products.
