BT Explainer: Why Škoda Auto Volkswagen is selling stake to an Indian partner
Despite being in India for over two and a half decades, Škoda has struggled to make inroads in the world’s third-largest passenger vehicle market by volume.
- Aug 19, 2026,
- Updated Aug 19, 2026 6:06 PM IST
Škoda Auto Volkswagen India Pvt Ltd, which spearheads Volkswagen Group’s India strategy, expects to sign a deal with a local partner.
"I'm deeply convinced that our momentum can be much stronger if we have a local partner with strong roots," Skoda CEO Klaus Zellmer told reporters on the sidelines of the unveil ceremony of the Czech carmaker’s new Slavia sedan.
While Zellmer did not name the India partner, rumours of a possible deal between Škoda Auto Volkswagen and Sajjan Jindal-led JSW Group have been going on for quite some time.
Why is Škoda searching for a local partner in India?
Škoda Auto entered the Indian market in 2001. Despite being in India for over two and a half decades, Škoda has struggled to make inroads in the world’s third-largest passenger vehicle market by volume. It accounts for 2% share of India’s passenger vehicle market, much lower compared to Japanese and Korean rivals. In comparison, Kia India, which began selling cars in India in 2019, accounts for 6% share.
$1.4-billion tax demand
A tax demand of $1.4 billion further added to its woes in 2024. Škoda Auto Volkswagen is locked in a legal battle with India’s tax authorities over allegations that it misclassified imports of certain Audi, Volkswagen and Škoda cars to avoid higher duties. Even though the automaker has challenged the tax demand, the court has yet to deliver its verdict.
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Cost cuts
All this comes at a time when German auto giant Volkswagen is planning to axe as many as 100,000 jobs and shut down four factories in Germany amid increasing competition from Chinese carmakers. To slash costs, the Volkswagen Group has been downsizing workforce to get to annual net cost savings of over 6 billion euros by 2030. The VW Group had announced 50,000 job cuts at Volkswagen, Audi, Porsche and its software subsidiary CARIAD.
Possible deal with JSW Group
A possible deal with steel-to-cement conglomerate JSW Group would allow Škoda Auto to share investment risk in a market where it has faced fierce competition for a long time.
JSW Group already owns 35% stake in JSW MG Motor India, a joint venture with China’s SAIC Motor. Steel magnate Jindal is also gearing up to launch vehicles under the ‘JSW Motors’ brand. JSW Motors is setting up a greenfield EV manufacturing facility in Chhatrapati Sambhaji Nagar, Maharashtra. It has also signed a deal with Chinese carmaker Chery.
Škoda Auto Volkswagen India Pvt Ltd, which spearheads Volkswagen Group’s India strategy, expects to sign a deal with a local partner.
"I'm deeply convinced that our momentum can be much stronger if we have a local partner with strong roots," Skoda CEO Klaus Zellmer told reporters on the sidelines of the unveil ceremony of the Czech carmaker’s new Slavia sedan.
While Zellmer did not name the India partner, rumours of a possible deal between Škoda Auto Volkswagen and Sajjan Jindal-led JSW Group have been going on for quite some time.
Why is Škoda searching for a local partner in India?
Škoda Auto entered the Indian market in 2001. Despite being in India for over two and a half decades, Škoda has struggled to make inroads in the world’s third-largest passenger vehicle market by volume. It accounts for 2% share of India’s passenger vehicle market, much lower compared to Japanese and Korean rivals. In comparison, Kia India, which began selling cars in India in 2019, accounts for 6% share.
$1.4-billion tax demand
A tax demand of $1.4 billion further added to its woes in 2024. Škoda Auto Volkswagen is locked in a legal battle with India’s tax authorities over allegations that it misclassified imports of certain Audi, Volkswagen and Škoda cars to avoid higher duties. Even though the automaker has challenged the tax demand, the court has yet to deliver its verdict.
Don't Miss: Sustainable packaging to be 10-30% costlier, says Zomato's chief sustainability officer
Cost cuts
All this comes at a time when German auto giant Volkswagen is planning to axe as many as 100,000 jobs and shut down four factories in Germany amid increasing competition from Chinese carmakers. To slash costs, the Volkswagen Group has been downsizing workforce to get to annual net cost savings of over 6 billion euros by 2030. The VW Group had announced 50,000 job cuts at Volkswagen, Audi, Porsche and its software subsidiary CARIAD.
Possible deal with JSW Group
A possible deal with steel-to-cement conglomerate JSW Group would allow Škoda Auto to share investment risk in a market where it has faced fierce competition for a long time.
JSW Group already owns 35% stake in JSW MG Motor India, a joint venture with China’s SAIC Motor. Steel magnate Jindal is also gearing up to launch vehicles under the ‘JSW Motors’ brand. JSW Motors is setting up a greenfield EV manufacturing facility in Chhatrapati Sambhaji Nagar, Maharashtra. It has also signed a deal with Chinese carmaker Chery.