Mahindra & Mahindra announced its strategic alliance with Ford Motor for 3 years to cooperate in manufacturing, distribution and various other areas. The tie-up will leverage the benefits of Mahindra’s scale in India and operating model and Ford’s global reach and expertise.
Mahindra and Ford said that they will collaborate on Mobility programs, Connected vehicle projects, Electrification, Product development, Sourcing and commercial efficiencies, Distribution within India; improving Ford’s reach within India and Global emerging markets; improving Mahindra’s reach outside of India.
It was a joint venture (JV) with Ford to make an entry in the passenger car segment and it launched the Ford Escort. Later on Ford ended taking the stake in the JV and car went with the company.
For Ford Motor it was a way for it to enter the Indian market and get more knowledge before taking the plunge alone.
While for Ford it helped them get a foothold into the Indian market, for Mahindra it still did not manage to attain success in the sedan market.
A recent example of this was the alliance between Tata Motors and Volkswagen Group's Skoda partnership which came to an end 5 months in August after a memorandum of understanding (MoU) was signed.
To make an entry into the heavy commercial vehicles segment Mahindra had two joint ventures with US-based Navistar International Corp in 2005 and 2007. It was considered a formidable deal and gave Mahindra the technological knowledge and expertise to become a full-fledged automobile company. The joint ventures ended in 2010 when Mahindra decided to buy the stake of the US-based company.
One of the reasons for these partnerships between automobile companies despite them not lasting for long is the significant pressure that automobile companies are facing due to the rapid changes.
“Mahindra has not been doing well in many of its segments and in its core SUV segment too it has seen its market share eroding due to competition. Basically they are trying to use this alliance with Ford as a crutch to go out into international markets as it has been facing tough competition in India. I feel that Mahindra is trying to get into some automobile segment and to increase its global reach,” said the analyst.
He further said that Mahindra will benefit from the technological knowledge of Ford and its presence globally, but Ford will get to leverage Mahindra's distribution network and even its manufacturing capabilities.
“For Ford, like Toyota, it does not have a good presence in the Indian market despite being here for such a long time,” he adds.