Ford Motor Co Forms New Joint Venture with Indian Automaker Mahindra
【Summary】Ford Motor Co announced today a new joint venture with Indian automaker Mahindra & Mahindra. The joint venture will distribute Ford branded vehicles in India, and both Ford and Mahindra vehicles in other “high-growth” markets around the world, Ford said.
Ford Motor Co announced today a new joint venture with Indian automaker Mahindra & Mahindra. The joint venture will distribute Ford branded vehicles in India, and both Ford and Mahindra vehicles in other "high-growth" markets around the world, Ford said. The JV is expected to be operational by 2020.
Ford was among the first global automakers to enter India in 1995.
"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.
Mahindra will control a 51% percent stake in the new JV, while Ford will own a 49% stake. Ford said it will transfer its India operations to the new joint venture, including its employees and assembly and plants in Chennai and Sanand.
Both plants build engines for Ford and the automaker announced it would continue to run engine production operations at the two factories, as well as the Global Business Services unit, Ford Credit and Ford Smart Mobility.
"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," said Bill Ford, executive chairman, Ford Motor Company.
The new JV will expand Ford's market share in India. According to Mahindra, the joint venture will have a combined 14 percent market share of India's auto market, up from Ford's market share of less than 3 percent.
For Ford, the joint venture comes after the automaker failed to gain a foothold in India after twenty years trying to break into the market on its own. India is the 4th biggest auto market in the world. With the new JV, Ford is essentially giving up its independent India operations, but hopes to perform better as a partner in a joint venture with a local company with a closer understanding of the auto maket in India.
Ford has been "struggling for a long while," and Mahindra's products as well as its sourcing and distribution network will support the American company, said Priya Ranjan to Bloomberg, an analyst at Antique Stock Broking in Mumbai. "It is not about giving up on India, it's about doing better in India."
Ford said it will continue to own the Ford brand in India, and its branded vehicles will be distributed through the automaker's current India dealer network. Mahindra will continue to own the Mahindra brand and operate its own independent dealer network in India.
"Strong alliances like this play a crucial role in assuring we continue to achieve our vision while at the same time staying competitive and delivering value to our global stakeholders," said Jim Hackett, Ford president and CEO.
Focus on Electric Vehicles
Another area of focus between Ford and Mahindra will be electric vehicles. The two automakers will collaborate to develop electric models for emerging markets outside of India. The joint venture expects to introduce three new utility vehicles under the Ford brand, including a new midsize sports utility vehicle that will have a common Mahindra platform and powertrain.
Ford is also working with German automaker Volkswagen on EVs. In July, Ford Motor Co. and Volkswagen announced a cooperation on electric and autonomous vehicles. Ford's partnership with VW has the potential to save each company hundreds of millions in development costs as global automakers race to electrify their lineups and develop self-driving technology.
Ford is the first automaker to use Volkswagen's new electric vehicle architecture and Modular Electric Toolkit (MEB) for its own electric models. The first vehicles using the MEB platform are set to go on sale in 2023 in Europe.
Ford expects to deliver more than 600,000 European vehicles using the MEB architecture over the next six years and now it will share platforms with Mahindra.
"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." said Dr. Pawan Goenka, managing director, Mahindra & Mahindra Limited.
Mahindra has led the utility vehicles segment in India for the past seven decades and is the only automaker with a portfolio of electric vehicles commercially available in India. Mahindra also has entered into the shared mobility space with investments in ridesharing platform Lyft in the U.S.
India is the third-largest Ford employee base globally, with more than 14,000 people working across the Ford India and Global Business Services operations in Delhi, Chennai and Coimbatore. Mahindra employs over 240,000 people across 100 countries.
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