Automakers Ford Motor Company and Mahindra & Mahindra have signed a new agreement to create a joint venture that will develop, market and distribute Ford vehicles in India. The announcement confirms that the joint venture will see the American carmaker transfer ownership of its Sanand and Chennai facilities to the new JV. Mahindra owns a 51 per cent controlling stake in the new joint venture and the remaining 49 per cent owned by Ford. While the companies will co-develop products going forward, they will continue to operate out of independent dealer networks. Ford though will retain the engine plant operations at Sanand along with the Global Business Services unit, Ford Credit and Ford Smart Mobility.
Speaking on the new joint venture, Anand Mahindra, Chairman, Mahindra Group said, "Mahindra and Ford coming together is a testament to the long history 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 the shared values of both companies, which are focused on caring for our customers, associates and our communities."
Ford Motor Company, Executive Chairman, Bill Ford said, "Ford and Mahindra have a long history of working together, and we are proud to partner with them to grow the Ford brand in India. We remain deeply committed to our employees, dealers and suppliers, and this new era of collaboration will allow us to deliver more vehicles to consumers in this important market."
The JV will see the brands co-develop 3 new UVs for Ford starting with a new mid-size SUV
Mahindra and Ford say the joint venture is the next step in the strategic alliance that was first introduced in September 2017. The JV will be operational by mid-2020 and will be operationally managed by Mahindra with the governance to compose members from both manufacturers. The joint venture will be responsible for growing Ford's presence in India and exporting its products the company's entities globally. The brand will continue to remain in India.
The joint venture will see the brands co-develop new products and this includes three new UVs under the Ford brand starting with a new mid-size SUV that will have a common platform and powertrain shared by the companies. The automakers are also working on the new generation Aspire EV that is currently under development and will use a powertrain sourced from the Indian automaker.
"Emerging economies including India are expected to account for one in three future vehicle sales," said Pawan Goenka, Managing Director, Mahindra & Mahindra Limited. "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 joint venture to successfully position its vehicles in India, as well as unlock the potential of other highly competitive emerging markets".
"The creation of this joint venture is a pivotal moment in both our companies' histories. Strong alliances such as this play a crucial role for Ford to compete profitably in the high-volume, affordable vehicle segments so popular with our diverse customer base. By combining our respective talents, we will offer more vehicles to more customers in more places than ever before and deliver profitable growth to both Ford and Mahindra," said Jim Farley, president of Ford New Businesses, Technology & Strategy.
The newly developed products will not only cater to India but several other emerging markets globally. The JV will see Mahindra leverage Ford's global presence to enter newer markets and export its products. At present, the Indian auto giant's exports stand at about sevent per cent of its total automotive business revenues. The brands will also maximise economies of scale in the automotive value chain including sourcing, product development and access to new technologies.
The JV will also impact Ford's newly established International Markets Group (IMG) business unit. IMG connects 100 high-potential emerged and emerging markets including India, Australia, ASEAN, Middle East, Africa and Russia. The new JV will add to IMG's portfolio of products specifically tailored for emerging markets, in addition to the Ford Ranger and the US import businesses. The company says the new JV places at the centre of Ford's strategy for IMG. On the other hand, Mahindra has been aggressive about its global expansion. The automaker owns a majority stake in the Korean-based SsangYong Motor Company and has also entered into the shared mobility space with investments in ride-sharing platforms in the US.
The JV also marks a new chapter for Ford in India, having first set-up operations in 1995. The company continues to be one of the largest exporters from its two facilities, and employs over 14,000 personnel across the country. India is the third-larget Ford employee base globally with people working across Ford India and Global Business Services operations in Delhi, Chennai and Coimbatore.