Ford exploring strategic alliance with Mahindra
GREENER RIDE Potential cooperation to include product development, EVs
MUMBAI/ NEW DELHI: Homegrown auto conglomerate Mahindra & Mahindra Ltd and Detroit-based automaker Ford Motor Co. on Monday said that they are exploring a strategic alliance to leverage each other’s strengths to address rapidly emerging challenges in the global automobile industry.
The agreement between the two companies will allow each to leverage their mutual strengths during a period of unprecedented transformation in the global automotive industry, the companies said in a joint statement.
“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,” the statement added.
The areas of potential cooperation include mobility programs, connected vehicle projects, electrification, product development, sourcing and commercial efficiencies, distribution within India to improve Ford’s reach, and into global emerging markets to scale up Mahindra’s network.
The partnership at first glance seem to provide equal opportunities to both the companies as the Indian firm will gain from Ford’s advanced technologies and global network while the Bill Ford-led firm will get a stronger and bigger footprint in the lucrative Indian market, which is expected to be the second-largest passenger vehicle market by 2026 with an annual volume of 13.4 million units per year if the local economy grows at an annual pace of 7.5%, according to the Indian government.
To be sure, Ford was instrumental in shaping up Mahindra’s passenger vehicle business when both the companies first tied up to make Escort sedan in India in 1995. The company in 1998 became Ford India Pvt. Ltd.
The automobile industry-both in India and globally--has changed a great deal since then. While Ford is still unprofitable in India and Mahindra has not grown significantly overseas, concepts such as shared mobility, autonomous cars and electric vehicles have threatened to disrupt the sector forcing the traditional giants of the space to cobble up a handful of partnerships to take on the perceived challenges from Uber, Apple Inc. and Google Inc. (with the first being a leader in ride hailing service and latter two claiming to enter the auto space in foreseeable future). Of course, electric vehicle maker Tesla Inc. is the cynosure of all the auto firms.
“...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,” Pawan Goenka, managing director, Mahindra, said in the statement.
For Ford, it is about gaining local scale and inroads into Mahindra’s affordable electric vehicle technology.
“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,” Jim Farley, executive vice-president and president for global markets, Ford Motor Co. said in the statement.
Mahindra’s shares rose 0.14% to Rs1294.85 on the BSE, while the benchmark Sensex gained 0.47%.