BERLIN -- Volkswagen Group's Skoda division said talks with India's Tata Motors on a strategic alliance have ended because the two automakers failed to achieve planned cost savings.
"The two companies have come to the conclusion that at the present point of time the technical and economic synergies cannot be realized in the desired way," Skoda said on Thursday.
But Skoda did not rule out the possibility for future cooperation with Tata after the "intensive and constructive talks" in past months.
The collapse of the talks is a further blow to VW's efforts to develop a cheap platform for Asian markets, after an earlier alliance with Suzuki also fell apart.
In March, VW and Tata Motors signed a memorandum of understanding for a long-term partnership to explore joint development of products for customers in India and other markets.
VW commissioned Skoda to lead the talks and explore a possible entry-level car platform using Tata's AMP vehicle platform.
Skoda dropped the idea of developing the AMP platform because of fears that it would need significant further investment to meet future crash-test and emissions requirements, said a VW Group source, who declined to be named.
VW and Skoda have decided to explore VW's MQB platform for possible further synergies, the source said.
The talks with Tata Motors ended amicably, the source said.