Sports utility vehicle specialist Mahindra & Mahindra and US giant Ford will explore a strategic alliance in areas of product development, future mobility, electric and connected vehicles.
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, both the companies said.
The two companies will explore the potential for shared investment, economies of scale, technology sharing and higher efficiencies in conventional areas like product development sourcing and distribution as also in emerging growth area of mobility, electrification and internet of vehicles of connected cars.
Pawan Goenka, Managing Director, Mahindra & Mahindra said, “The changes facing the automotive industry globally are triggered by the accelerated rise of new technologies, sustainability policies and new models of urban shared mobility. Given these changes we see the need to anticipate new market trends, explore alternatives and look for ways to collaborate even as we compete and build powerful synergies that will allow rapid exploitation of the exciting new opportunities”.
“Today’s announcement builds on the foundation laid through our past partnership with Ford and will open opportunities for both of us,” Goenka said.
Even after more than two decades of operation in India, Ford has failed to get a strong foothold in the domestic market. The company has dramatically shrunk its product portfolio to just five cars including the imported Mustang. Its domestic market share languishes at just around 3 percent.
Jim Farley, Ford Executive Vice President and President of Global Markets said, “Our two companies have a long history of cooperation and mutual respect. The memorandum of understanding we have signed today with Mahindra will allow us to work together to take advantage of the changes coming in the auto industry. The enormous growth potential in the utility market and the growing importance of mobility and affordable battery electric vehicles are all aligned with our strategic priorities.”
With General Motors announcing a break from India to focus purely on exports it was widely speculated that Ford could be the next to announce a similar strategy as exports are driving the volumes for the struggling company.
The two companies also said that they will explore the possibility of tapping into each other’s retail network as well. Ford will explore if it can use M&M’s India sales network while M&M will explore if it can use Ford’s global sales network. Joint sourcing of components for commercial efficiencies is also on the table.
Governments across the world are pushing for an environmentally clean and more efficient means of future mobility which includes electric and hybrid vehicles. With the Modi government too pushing for a 100 percent electric mobility plan from 2032 onwards companies have fast tracked their plans including new partnerships.
Suzuki Motor Corporation and Toyota signed a deal to work jointly in this area while Tata Motors explored a fruitless partnership with Volkswagen and Skoda. M&M has been at the forefront of the much anticipated electric revolution in India as it is the only company to manufacture and launch electric cars here.
If indeed Ford and Mahindra forge a partnership going ahead then history will repeat itself. Ford entered India through a 50:50 partnership with M&M in 1995. M&M was responsible for making the Ford Escort car in India. Ford raised its stake in the venture and eventually fully bought out M&M’s stake.