Volkswagen to join hands with Tata Motors to develop budget car?

German car-maker Volkswagen, which lost its charm over the emission scandal, is reportedly planning to restart its small car project in association with Tata Motors.

Volkswagen management has been negotiating the project with Tata Motors, reports German publication Manager Magazin. The publication says the companies are yet to reach on the final decision on whether Tata will develop the model completely or partially for VW. The budget car is reportedly for markets like China and India.

The budget car will be most affordable of VW not just in India but around the world. The responsibility for the current project lies with brand chief Herbert Diess. Volkswagen has been considering coming up with a low cost brand for quite long. However, the issues with emission scandal in the US put the project on the back-burner.

Choice of Tata Motors is not surprising since the Indian car-maker made headlines in 2010 after launching the Nano, the world's cheapest car for Rs 1.05 lakh. Hence, Tata Motors has already proved they can make cars in tight budget. Further, the proximity between Tata Motors and Volkswagen plant in Pune will make the infrastructure movement hassle free.

A decision has still not been reached on the project.