Mumbai, Oct 29 :
Being a global player in passenger vehicles is a dream Mahindra & Mahindra has harboured for long. Earlier this month the homegrown maker of sports utility vehicles and tractors decided to give its ambitions wings by stitching up a deal with a foreign partner once again.
After two years of intense deliberations, which started in September 2017, M&M and Michigan-based Ford Motor have announced a joint venture in which Mahindra will control the majority 51 per cent stake, whereas Ford will transfer its entire India business, excluding the engine vertical, to the new entity. This will be M&M’s third deal with a foreign partner. The nuts and bolts of the deal are quite straightforward. Both companies expect to achieve cost synergies, pare product development time and cost and leverage each other’s distribution reach to boost exports. “The big benefit that comes to Ford and Mahindra is on the exports front. It opens up a lot of possibilities,” M&M Managing Director Pawan Goenka told Business Standard. Given that Ford has a huge network in many emerging markets and M&M in South Asia, the combined distribution can cast a much wider net than each can alone. Ford’s India business is also more geared towards exports, with six out of every 10 vehicles currently being made in the country exported. For M&M, exports account for only 6.3 per cent of total volumes, and it expects the JV to give this number a boost. Ford’s struggles are more on the domestic front, where the venture with M&M could come in handy. High cost structure, stiff competition from Japanese and Korean brands, frequent policy changes and cyclical swings have kept its domestic share at 2.8 per cent in 2018-19. A lot is riding for both entities on the new models, including a C-segment SUV based on M&M’s platform, a B-segment SUV based on Ford’s platform, and a new MPV, being planned by the JV. The companies are also working on the new generation Aspire electric vehicle. M&M has made an equity investment of Rs 657 crore into the JV, which is half the amount required to develop these products.real test for the co-developed vehicles, though, will be when they begin exporting their new models in about three years.
For the Indian market, the JV will stay clear from badge engineering — where an existing model is changed by adding a new bade and subsequently marketed as a new variant.
The platforms co-developed by the new entity will have distinctive top hats and even body types bearing the DNA, feature, and styling of each brand.
