Economy

Ford, Mahindra Group to explore strategic alliance

Ford, Mahindra Group to explore strategic alliance”

Indian automaker Mahindra Group and Ford Motor Company (F) on Monday agreed to explore a strategic collaboration, which would leverage Ford's global scope and expertise and Mahindra's scale in India and efficient operating model.

As part of the "agreement of intent", Mahindra and Ford will leverage their mutual strength during a period of unprecedented transformation in the global automotive industry.

According to the two companies, the areas of potential cooperation include, mobility programmes, connected vehicle projects, electrification, product development, sourcing and commercial efficiencies, distribution within India to improve Ford's reach and global emerging markets to improve Mahindra's reach outside India.

The new alliance comes as foreign vehicle makers like Fiat Chrysler (FCHA.MI), Volkswagen (VOWG_p.DE) and General Motors (GM.N) have struggled in India where nimbler rivals such as Maruti Suzuki (MRTI.NS) and Hyundai Motor (005380.KS) have cornered roughly two-thirds of the market.

Despite two decades of presence in India, Ford India has a sub-optimal share of less than 3% and majority of its output from India is directed towards overseas market - enabling Ford to utilise 60% of its installed capacity of 4.4 lakh units.

Indian carmaker Mahindra and Mahindra has entered into a partnership with American auto giant Ford Motors Company.

Terms laid out in a joint statement call for working together for up to three years in areas including mobility, connected vehicles, electric vehicles and product development.

Interestingly, the two groups are coming together again after a gap of several years.

Globally, traditional automakers are weighing how best to work on new, disruptive technology, from electric vehicles to autonomous driving, that require hefty investment and have turned firms such as Alphabet Inc's Google and Tesla into rivals. "The overall long-term roadmap however, is still unclear".

"Given these changes Mahindra sees 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".

Ford is among the top exporters of cars from India and manufactures and exports vehicles and engines from its plants in Chennai, Tamil Nadu and Sanand in Gujarat.

From April to end-August this year, Ford sold 36,703 passenger cars in India compared with Mahindra's 96,051.

Ford said the growth potential in the sports utility market and the increasing importance of affordable electric vehicles in India were aligned with its strategic priorities. The country is also Ford's second-largest worker base globally, with more than 14,000 employees.



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