New Delhi: American auto maker Ford Motor Co. and Mahindra and Mahindra Ltd, the country’s third largest vehicle manufacturer, will jointly develop a mid-sized sports utility vehicle (SUV) for India and other emerging markets, the firms said on Thursday.
The SUV will have a common Mahindra product platform and power train. This will help substantially reduce the cost of development for both companies.
After the two companies came together for the first time in 2017, Mahindra and Ford announced the development of a low displacement petrol engine and a telematics control unit, as part of the connected vehicles project in 2018.
As part of the tie-up, Mahindra dealers are now allowed to open mini showrooms to sell popular Ford cars such as the Ford EcoSport SUV, in regions where the American firm does not have a dealership.
Ford had got into the strategic alliance with Mahindra as it sought to cut costs through restructuring its businesses in markets where it was struggling. In India, the company has been primarily relying on exports, considering that domestic sales volumes had decreased significantly.
The cost cutting efforts bore fruit with Ford reporting its first net profit in 2017. The plan helped Ford grow its India business from $2.1 billion in 2015-16 to $2.8 billion in 2016-17, and $3.4 billion in FY18.
The Ford partnership gives Mahindra the much-needed technological know-how in developing petrol engines and electric vehicles, besides offering connected solutions for passenger vehicles.
Pawan Goenka, managing director, Mahindra and Mahindra, said after having identified several areas for joint development, both companies continue to work together to develop products using the common products platform. This will also help gain economies of scale for both companies.
“I am happy with the significant progress we have made and synergies we have created since the announcement of our strategic alliance with Ford in 2017. Today’s announcement is another significant step in collaboration between the two companies," added Goenka.
According to a joint statement, the Mahindra-Ford partnership is focused on leveraging the benefits of both companies—Ford’s global reach and expertise and Mahindra’s scale and successful operating model in India.
Both teams continue to collaborate on all areas of mutual interest, including electrification, distribution and product development.
“With today’s announcement we not only strengthen our ongoing partnership with Mahindra, but also sharpen our competitiveness in an important emerging market like India," said Jim Farley, president, Ford new businesses, technology and strategy.
“Ford’s technological leadership, combined with Mahindra’s successful operating model and product prowess, will surely help us deliver a vehicle that will meet the expectations of customers in India, as well as other emerging markets," he added.
Mahindra is also working on developing an electric version of Ford’s compact sedan Aspire.
In 2017, Ford had said that it was embarking on a decade-long restructuring plan that would cost the Detroit, US-based auto maker $11 billion, as it sought to increase its operational efficiencies across the world.
The announcement came amid prolonged poor performance in markets such as the US and China. The company also launched its ‘emerging mode operating model’ to improve its fortunes in markets like India.
On 5 December, Mint reported that Mahindra had started selling cars manufactured by Ford in India as the two auto makers sought to expand their alliance beyond joint development of vehicles.