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A Strategic Alliance

alued at Rs 1,925 crore, the new partnership between M&M and Ford Motor Company will drive enhanced competitiveness through greater economies of scale across the automotive value chain, including optimized sourcing, product development, use of relevant technologies and building a global network. The partnership will also allow Ford and Mahindra to offer new products to customers faster and deliver profitable growth to both companies.

On this profitable partnership, Anand Mahindra, Chairman, Mahindra Group, said, “Mahindra and Ford together is a testament of cooperation and mutual respect between the two companies. Our combined strengths – Mahindra’s expertise in value-focused engineering and its successful operating model, and Ford’s technical expertise – global reach and access to future technology – are a potent recipe for success. At its core, the partnership will be driven by shared values of both companies, which are focused on caring for our customers, associates, and our communities.”

Adding to this, Jim Hackett, President and CEO, Ford Motor Company, said, “At Ford, our purpose of 116 years has always been to drive human progress, and that won’t change. To continue to do that, we need to evolve with new and faster ways of not only delighting our customers around the world, but also solve the very different needs. Strong alliances like this, play an important role in assuring we continue to achieve our vision, while at the same time, staying competitive and delivering value to our global stakeholders.”

While, this isn’t the first time that M&M and American multinational automaker, Ford Motor Company have joined hands, (the two auto giants had announced a strategic alliance in September 2017, followed by a declaration regarding powertrain sharing and connected car solutions in October 2018), this new joint venture is expected to achieve enhanced efficiencies to strengthen the Ford brand in India. In addition, this partnership will also be a catalyst for growth for the Ford and Mahindra brands in emerging markets, which are presently growing at double the rate of the global industry. Dr Pawan Goenka, Managing Director, M&M, said, “The joint venture will have a distinct product portfolio with shared platforms and powertrains, the newest technology, high quality and engineering standards from both Mahindra and Ford at optimized costs. This winning combination will enable the JV to successfully position its vehicles in India, as well as unlock the potential of other highly competitive emerging markets.”

With the signing of the new definitive agreement, Ford and M&M have decided on the following -

  • The two companies will jointly develop, market and distribute Ford branded vehicles in India, as well as distribute both Ford and Mahindra branded vehicles in high-growth emerging markets around the world
  • Mahindra will own 51% controlling stake, while Ford will own 49% stake
  • Ford will transfer its India operations under the joint venture to M&M, including their personnel and assembly plants in Chennai and Sanand, Gujarat. However, Ford will retain the Ford engine plant operations in Sanand, as well as their Global Business Services unit, Ford Credit and Ford Smart Mobility
  • The JV will be operationally managed by Mahindra, and its governance will be equally managed by representatives of both the companies
  • The partnership will be responsible for growing the Ford brand in India and exporting its products to Ford entities globally
  • Ford and Mahindra will jointly introduce three new utility vehicles under the Ford brand, beginning with a new mid-size SUV, that will have a common Mahindra product platform and powertrain
  • Mahindra and Ford will collaborate to develop electric vehicles to support the growth of sustainable mobility across emerging markets
  • Greater economies of scale will be driven across the automotive value chain, including sourcing, product development and access to relevant technologies
  • The partnership will use the Ford brand distribution network in emerging markets to extend support for the export of Mahindra products, in addition to Ford branded vehicles
  • Ford’s newly established International Markets Group (IMG) business unit will play a key role in the process
  • In addition to Ford Ranger and the US import businesses in IMG, the partnership will add to IMG’s portfolio vehicles specifically tailored for emerging markets
  • Under the new structure, Ford will continue its support for all Corporate Social Responsibility (CSR) initiatives

Jim Farley, President, Ford New Businesses, Technology & Strategy, said, “The creation of this JV is a pivotal moment in both our companies’ histories. Strong alliances such as this, will play a crucial role for Ford to profitably compete in the high-volume, affordable vehicle segments which are so popular with our diverse customer base. By combining our respective talents, we will offer more vehicles to customers in more places than ever before, and deliver profitable growth to both Ford and Mahindra.”