Teams from Ford Motor Co. and Mahindra and Mahindra Ltd. (M&M), constituted this week to explore a strategic alliance covering areas ranging from mobility to connected vehicles and technology, will start identifying areas of possible cooperation within six months, Vinay Raina, executive director, marketing, sales and service, Ford India, said in an interview.
“Ford brings a lot of understanding on the technologies,” Mr. Raina said. “We understand connected cars and there is a lot of work happening around electrification. At the same time, Mahindra brings in a lot of insights on the Indian market. Mahindra has understanding of cost and development of parts and supplies within the country.”
On September 18, both the automakers agreed to explore a strategic alliance to leverage mutual strengths such as mobility programmes, connected vehicle projects, electrification, product development, distribution within India for Ford and improving Mahindra’s reach outside India. Teams from both the companies will collaborate and work together for a period of three years.
“The intent is to see if the experts in the teams could engage with each other and identify any opportunity exists for us to work further. At this point, it is a strategic alliance to engage with each other in these specific areas which are clearly growth areas as well,” Mr. Raina said. “The first six months will be important. The teams will be in place by then to at least engage and to reach out and identify opportunities available.”
“It is a three-year agreement and what develops we only know over time. This is how we have envisaged the start of the partnership. I don’t think it limits us from progressing further. I don’t think the three-year limits us. It is just a start.”
The two groups broke off an earlier relationship in 2005. Ford, which entered India in 1995 through a JV with M&M, later increased its stake to 85% and took operational control. The Mahindra Group decided to align with Renault in a 51:49 equity partnership and Ford ended the relationship with both partners selling their cross-holdings in each other.
‘In high esteem’
“Ford has always held Mahindra in high esteem,” Mr. Raina said. “There is lot of respect the way the company conducts itself. It is one of the companies which has its name and moniker on every car it sells. Both the organisations have that in common. The way we approach customers is not dissimiliar.”
Together, the companies control about 11% market share in India’s passenger car market. Ford India has just 3% share. The Michigan-based firm’s sales fell 40.4% year-on-year in August. Maruti Suzuki is the largest carmaker with 47% share, followed by Hyundai Motor India with 16.7%.
“You had the GST coming in. You had the relaxation of the cess and revisiting of the cess rules. So there is so much happening in the industry in the last four months. It is hard to pick a month and say why did this happen. On a year-to-year basis we continue to grow. And this is a good place to grow. In 2015-16 we were in double digit growth numbers and we will be in line with the industry growth this year as well. The industry is probably tracking at 5-6% year-on-year,” Mr. Raina said.
“Each of those workstreams hold a lot of promise. Connected cars are a very big thing globally and India is an extremely aggressive cost centre,” Mr. Raina said. “Mobility is also extremely important. There is also product development which is the nuts and bolts of the business we continue to do today.
“What could emerge from this could be very interesting and big,” he said. “There will be a lot that happens in India in the future. India is a great place to create a model and then use it in lot of emerging markets such as Africa. There are other markets that will follow the Indian story over time. We can create a template of how to grow the business.”