Domestic utility vehicle major Mahindra and Mahindra and US-based auto giant Ford Motor Company on Thursday signed five new memorandums of understanding to jointly develop a mid-size electric sports utility vehicle (SUV) as well as a platform for a compact SUV and a small car.
In September last year, the two companies had come together to discuss synergies to develop electric vehicles for the Indian market in the wake of the government pushing carmakers to adopt environment-friendly technologies and ditch petrol and diesel engines. Mahindra and Mahindra already has a few electric versions of its existing vehicles courtesy its take over of Reva Car Company five years ago but sales of these cars have remained subdued.
The MoUs signed today will see Mahindra and Ford leverage their strengths in the utility vehicle space to co-develop a mid-size sports utility vehicle (C-SUV) that will be built on the Mahindra platform but sold independently by both companies as separate brands. The two companies have also agreed to evaluate co-development of a compact SUV and electric vehicle, along with sharing powertrain portfolios, including the supply of Mahindra powertrains to extend Ford's existing product range.
C-segment SUVs are categorised as those that are longer than 4 metres. Vehicles like Hyundai's Creta, Renault Duster and Mahindra's own Scorpio straddle this segment.
The two firms would also co-develop a suite of connected car solutions for consumers.
"Today's announcement is the next step in the collaboration between Mahindra and Ford," said Dr Pawan Goenka, Managing Director, Mahindra and Mahindra Ltd. "Both teams are working together on joint development areas in keeping with industry requirements and leveraging mutual strengths. We are excited about the synergies unveiled through this collaboration and the potential opportunities it will bring."
The collaboration goes beyond just the vehicle platforms and would allow Mahindra support from Ford in global emerging markets that include using the American firm's manufacturing and distribution network. While the Indian automotive market is replete with examples of joint ventures and collaborations, very few have actually been successful. In recent times, tie-ups between Bajaj and Nissan for a low-cost car to rival the Tata Nano, Nissan and Ashok Leyland for small trucks, and a Tata-Volkswagen tie up for an India-centric common vehicle platform have all failed.
Mahindra's own track record in collaborating with global players is patchy. Its diversification into the passenger car segment with the Logan in a joint venture with French car maker Renault in 2005 was a damp squib and ended just 5 years later. Similarly, its commercial vehicle joint venture with Navistar around the same time also did not achieve the desired results and ended in 2012.
The two firms are however no strangers to each other. The two companies had joined hands back in 1995 to bring Ford's mid-sized saloon Escort in India. The partnership survived a decade and ended in 2005. This is by far the most comprehensive non-equity tie-up between an Indian and an overseas carmaker so far.
"Ford is committed to offering the best vehicles, technologies and services that fit the lifestyles and preferences of Indian consumers," said Jim Farley, Ford executive vice president and president of Global Markets. "Listening to our customers and incorporating their future needs is the core premise of this collaboration. With utility vehicles and electrification as key focus areas, we are glad to see the progress our two companies have made."
A joint collaboration between automakers is considered to be a win-win situation globally in a highly dynamic scenario where the industry is fast moving towards electric vehicles. Mahindra's scale in India, it is almost three times the size of Ford India, will enable Ford economies of scale in manufacturing which will help in bringing the cost of its products down in the domestic market. Similarly, Ford's larger research and development prowess will help Mahindra in bringing more efficient and refined products that meet global standards, an area considered to be its weakness.