Many summers after their separation, Mahindra Group and Ford Motor Company have returned to the table yet again to explore a strategic alliance covering a gamut of areas ranging from product to technology and distribution.
As part of this agreement, it has been decided that teams from both companies will collaborate and work together for a period of up to three years. “Any further strategic co-operation between the two will be decided at the end of that period,” said a joint release.
The statement said the two entities were hoping to work closely in this period on areas such as mobility programmes, connected vehicle projects, product development initiatives, electrification and distribution.
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The objective is designed to leverage the benefits of global reach and expertise of Ford and the operational scale of the Mahindras in India.
“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 statement said.
In a filing on the BSE, Mahindra & Mahindra said that the tie-up could facilitate its expansion into other global emerging markets.
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“Ford is committed to India and this alliance can help us deliver the best vehicles and services to customers while profitably growing in the world’s fifth-largest vehicle market,” the release quoted Jim Farley, executive vice-president and president of global markets as saying.
‘Shift in strategy’
The MoU with the Mahindras appears to signal a significant shift in the India strategy of Ford. Former Chief Executive Officer Mark Field, it may be recalled, had put Ford’s business in India under review. The revival of the partnership with the Mahindras is viewed as a tweak in the India game plan by Jim Hackett, the new CEO.
The joint release also saw Pawan Goenka, managing director, M&M, justifying the reunion. “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, 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,” he said.
Ford has invested more than $2 billion in the Indian market. It was among the first global automakers to enter the country in 1995. It manufactures and exports vehicles and engines from its manufacturing facilities near Chennai, Tamil Nadu and Sanand in Gujarat. It has more than 14,000 people working across Ford India or global business services operations in New Delhi, Chennai and Coimbatore.
Ford India Private Limited was formerly known as Mahindra Ford India Ltd. and changed its name to Ford India Pvt. Ltd. in March 1998. It entered India through a joint venture with M&M in which Ford held a 49% stake and M&M 51%. Ford gradually increased its stake in the venture to close to 85% and took over operational control from M&M. After M&M entered into a 51:49 equity partnership with French car-maker Renault, Mahindras and Ford had agreed to formally dissolve their relationship by selling their cross-holdings in each other. Accordingly, M&M sold its 15% share in Ford India and the U.S. company, its undisclosed holding in M&M. The exigencies of time has seen the wheel come full circle in their relationship.