Discussions involving joint product and new technology development among several other areas has moved ‘very positively’ between US giant Ford and homegrown SUV specialist Mahindra & Mahindra, eight weeks after the two companies began round of talks.
Speaking exclusively to Moneycontrol News, shortly after announcing the second quarter financial results, Pawan Goenka, Managing Director, Mahindra & Mahindra said, “Talks have moved ahead very positively (with Ford)”.
The two companies, who have been partners in the 1990s, have started talks which are exploratory in manner, in areas such as product development, new technologies (including electrification), connected vehicle technologies and sales and distribution.
Teams from both companies will collaborate and work together for a period of up to three years. Any further strategic cooperation between the two companies will be decided at the end of that period. Goenka, however, clarified that there may not be any need to set up a separate company for the partnership.
“There is no need for setting up any new company for it. We can very well do this without that”, Goenka added. M&M (along with MVML) posted a growth of 22 percent in net profit for the quarter ended September 30, 2017 as robust demand for tractors pushed margins. The company declared a bonus of 1:1.
The news is a positive development for M&M and for industry which has already seen a breakup of a similar high profile alliance a few months ago. Tata Motors and the Volkswagen Group called off their talks when both companies could not find any synergistc benefits arising from the proposed plans of platform and technology sharing.
Mahindra & Mahindra is under pressure in its home market following increased aggression by rivals Maruti Suzuki, Hyundai and Tata Motors. The Mumbai-based company’s market share dipped to its lowest at 29 percent, after car market leader Maruti Suzuki dethroned it to emerge as the biggest manufacturer of sport utility vehicles.
Meanwhile, despite entering the Indian market more than 25 years ago Ford has failed to make a mark in the domestic market. Its market share remains less than 3 percent with a severely curtailed product portfolio.
The company has just the EcoSport, compact SUV which generates more than half of its total sales. As a desperate measure Ford had shifted focus to make cars in India for the overseas markets.