Ford Mahindra break-up: 5 times when Motown partnerships didn't work

Ford Mahindra break-up: 5 times when Motown partnerships didn't work

The Mahindra-Ford joint venture isn't the first partnership to fail in the auto world, nor will it be the last. Here are five instances where collaborations in the past have gloriously missed their target

The decade was barely a couple of hours old when the first bombshell arrived - Mahindra and Ford decided to put off their joint venture plans. Since October 2019, they had been trying to cobble together a partnership which would have seen Ford exit the Indian market leaving its assets in the JV with Mahindra as the senior partner. The two companies had also planned a series of joint development programmes including common platforms, engines and powertrain but COVID-19 came as a cruel blow. The required investments that made sense a year back, looked highly risky in the post-pandemic world.

Yet, it comes as a shocker. The automotive industry is one that revels in partnerships. Examples like the Renault-Nissan alliance or Hero Honda closer home are testimony to that. Disruptions in the form of electrification, autonomous driving and shared and connected vehicles means the need for sharing investment and technology is even higher. In that context, on paper the deal not only looked like a win-win but also a necessity. Still, this isn't the first partnership to fail nor will it be the last. Here are five instances where collaborations in the past have gloriously missed their target.

Suzuki and Volkswagen

In 2009, German auto giant Volkswagen Group and Japan's mini car expert Suzuki joined hands to form an alliance that was expected to help the Japanese firm with future technology and aid VW in its quest to become the largest automaker in the world. Suzuki's subsidiary Maruti's giant-sized market leadership in India, which was then the world's fifth largest car market, was an obvious attraction for the Germans. The deal fell through within two years as by mid-2011 the Japanese felt they had got a raw deal. Four years of acrimonious battle in the courts followed and VW had to finally sell its near 20 per cent stake in Suzuki in 2015. What could have completely transformed Maruti Suzuki as a carmaker ultimately came to a naught.

Mahindra and Renault

This isn't the first time for Mahindra to struggle with its partnerships either. At the height of its SUV domination in India, the company decided to diversify into the fast-growing domestic passenger car market and found an eager ally in French carmaker Renault. Under the leadership of Carlos Ghosn, who would develop a soft corner for India in subsequent years, the two companies formed a JV in 2007 to build a range of cars beginning with the mid-size sedan Logan. The boxy car was however too dated for India, and was also at odds with recent regulations that rewarded cars smaller than 4 metres in length with lower taxation. The disaster of Logan put paid to any hopes for the JV's success, which folded up in a matter of just three years.

Bajaj and Nissan

The failure of Logan, however, did not deter Ghosn from having another go with an Indian partner. Mesmerised with the Tata Nano and eager to tap into the mini car segment in India he led Nissan into a partnership with domestic two-wheeler giant Bajaj Auto in 2010. Bajaj was supposed to make a frugal small car which could be sold by Nissan through its dealerships in India and other emerging markets. There was miscommunication between the two partners from Day 1. What Nissan wanted was a proper car that can go head-to-head against the Nano and Maruti Alto, Bajaj was merely interested in putting a fourth wheel to its three wheeler portfolio to tap into the nascent but promising small LCV market. After the Pune-based firm showcased the RE60 in the Auto Expo in January 2012, Nissan decided to end the partnership. It would go on to revive the Datsun brand on its own for the cars it wanted from Bajaj while the latter would brand the RE60 as the Qute, India's first quadricycle.

Bajaj and Kawasaki

Unlike the low cost car project, which by all means was a new venture for it, Bajaj's tie-up with Japan's powerhouse motorcycle giant Kawasaki had all the makings of a great collaboration. The company's hands on Managing Director Rajiv Bajaj has been a fan of Japanese engineering and looked up to Kawasaki from the company's early days of motorcycle foray. Some of its first bikes like KB100 and Caliber were infact developed jointly. In 2009, the companies took the partnership to the next level with sales and service arrangement wherein Kawasaki's premium bikes like the Ninja series would be marketed and sold by Bajaj through its standalone probiking showrooms. Bajaj's growing interest in Austrian adventure bikemaker KTM however perturbed Kawasaki. Bajaj first picked up a 14.5 per cent stake in the Austrian company in 2007 and would subsequently increase it to over 45 per cent by 2015 through multiple share purchases in the open market. KTM bikes were also sold at probiking showrooms alongside Kawasaki even as some of them competed against each other. It was something that made the Japanese uncomfortable. In April 2017, the companies decided to part amicably with Kawasaki opening up its own 100 per cent subsidiary in India.

Polaris and Eicher

An experimental joint venture between US-based Polaris and homegrown Eicher Motors in 2012 spawned the quirky Multix - a personal utility vehicle that can be used as a people mover, goods carrier or also as a back up power generator. It had a power take off point which could generate power up to 3 KW, good enough to light bulbs and other appliances.  Targeted largely at small businessmen and entrepreneurs mostly in the rural parts of the country, the 50:50 JV had a full fledged manufacturing facility of 60,000 units per annum built with an investment of Rs 350 crore and spread over 25 acres of land in Kukas near Jaipur in Rajasthan. There were plans to set up a dedicated R&D centre as well. After an initial spurt of demand, sales of the Multix however could not be sustained. In 2012, the JV was shut down and the business liquidated. It is one of those rare occasions where Siddhartha Lal, who owns Eicher Motors and is the chief architect of the revival of Enfield, has got it wrong.

Published on: Jan 04, 2021, 11:57 PM IST
Posted by: Vivek Punj, Jan 04, 2021, 11:57 PM IST