The companies were earlier into an equal partnership in 1990s and the venture was named Mahindra Ford India Ltd
Homegrown automobile major Mahindra & Mahindra (M&M) and Ford Motor Company on Monday announced re-entering into a strategic alliance to explore synergies in development of connected and electric cars, among other things.
The agreement so far has been inked for a three-year term. The development is set to intensify the battle in the world's third-largest automobile market dominated by Maruti Suzuki and Hyundai.
The companies were earlier into an equal partnership in 1990s and the venture was named Mahindra Ford India Ltd. They parted ways in 2005. Later on, M&M also entered into a collaboration with Renault India, but even that was called off.
The latest development comes amid reports about Ford management reviewing their India operations and planning to share the platform of other car manufacturers to make inroads into the Indian market.
The toughly-contested Indian automobile market has been seeing a lot of activity. While at least three-four foreign car companies are gearing up to enter the country in the next few years, Tata Motors and Volkswagen group called off their proposed collaboration citing lack of mutual benefit a few weeks ago. Also, General Motors (GM) had in May shut their India business due to lack of any success in making inroads into the market.
Meanwhile, almost all major automobile companies are trying their hands at developing affordable electric vehicles (EV) as the central government has set an ambitious target of year 2030 for all vehicles to be sold in India to be electric.
Commenting on the M&M-Ford tie-up, Abdul Majeed, partner at PwC, said, “Connected vehicles and electric vehicles are the future of the automotive industry and these trends will have to be dealt with more and more alliances considering the resources and time required.”
Jim Farley, executive VP and president of global markets, Ford, said, “Our two companies have a long history of cooperation and mutual respect. The memorandum of understanding we have signed 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.”
A statement issued by M&M said that the collaboration has been designed to leverage the benefits of Ford’s global reach and expertise and Mahindra’s scale in India and successful operating model.
According to Pawan Goenka, managing director, M&M Ltd, the changes facing the global automotive industry 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.”
...& ANALYSIS
- As of now, the strategic alliance between the automakers has been inked for a three-year term
- It will explore synergies in the development of connected and electric cars, among other things
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 "Mahindra & Mahindra")
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