How Ford-Mahindra and Mahindra partnership could be a game changer

BT Online        Last Updated: September 19, 2017  | 19:44 IST
How Ford-Mahindra partnership could be a game changer
Photo: Reuters

The strategic alliance announced by Indian carmaker Mahindra and Mahindra Ltd and Detroit-based Ford Motor Co. comes amid numerous environmental challenges faced by the global auto industry. The alliance, which was first forged in 1995 to make Ford cars in India under the banner of Mahindra Ford India Limited (MFIL), had led to Mahindra developing its first SUV Scorpio from scratch.

The strategic partnership announced by two carmakers will leverage each others strength to deal with changing practices across global auto industry. For US-based Ford, it will ensure access to affordable electric technology used by Mahindra and a greater footprint in the Indian market where it currently holds less than 3 per cent market share.

For Mahindra, this alliance holds the key to its international ambitions as it plans to expand its global distribution network. Also, the partnership comes close on the heels of policymakers announcing early phase out of petrol and diesel vehicles in India.

Like other global auto companies, Ford faces a challenge in bringing affordable electric cars to developing markets like India and China. The alliance could help the duo take on India's largest carmaker Maruti Suzuki, which recently announced a tie up with Toyota for opening of a lithium ion battery plant in Gujarat to power its electric vehicles.

In 2010, Mahindra had acquired a controlling stake in Bengaluru-based electric car manufacturer Reva Electric Car Co. The same year it bought a controlling stake in struggling South Korean carmaker SsangYong Motor Co. for Rs 2,100 crore.

Mahindra's another big acquisition was in 2015 when the automaker bought Italian car designer Pininfarina SpA for $185 million. Pininfarina has designed cars from manufacturers like Ferrari, General Motors, Mitsubishi, Volvo, Hyundai, etc.

At a time when global auto indutry is facing challenges from electric cars and driverless technology, the partnership is likely to boost Mahindra's US plans.

Mahindra and Mahindra had earlier announced opening of its maiden greenfield auto manufacturing plant in Detroit this year. Mahindra will become the first Indian carmaker to own a plant in the US.

"We are looking at opening (the plant) this year. That's a major milestone where an Indian automotive company is opening up manufacturing in a resurgent Detroit. I think that's a wonderful twist of history," Mahindra group chairman Anand Mahindra had said.

The group has deployed $1.5 billion in the US to generate $2.5 billion revenue, employing 3,000 people. The plan is to double all three figures over the next two-three years.

Last year, Mahindra group launched its first connected all-electric scooter GenZe in the US for $2999 per unit. Generation Zero Emission (GenZe) focuses on electric mobility.

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