M&M-Ford alliance showing ‘tangible cost savings’

G Balachandar Chennai | Updated on February 13, 2020

Pawan Goenka, MD, M&M   -  Bijoy Ghosh

To launch connected vehicle solutions soon

Mahindra & Mahindra Ltd has indicated that its alliance with Ford was showing initial tangible outcomes for both the partners by way of cost savings across product development and manufacturing.

Last year, both Mahindra and Ford signed an agreement to create a 51:49 joint venture that will develop, market and distribute Ford brand vehicles in India and Ford and Mahindra brand vehicles in emerging markets.

The partners had indicated that the joint venture would focus on achieving greater economies of scale across the automotive value chain including sourcing, product development and access to relevant technologies.

“We have the first small tangible output of our alliance with Ford where we will be launching connected vehicle solutions. I think Ford will be launching this shortly and we will launch by the end of this fiscal. This was developed jointly after we announced Phase 1 of our collaboration with Ford,” Pawan Gonka, Managing Director of Mahindra & Mahindra, told the company’s earnings’ conference call.

SUV platform

He also said the development of C segment SUV platform was going on in full swing and it would provide a savings of about ₹1,000 crore in terms of overall investment compared to if Ford and Mahindra were to do it separately. Same in the case of development of B segment SUV, which is also expected to provide similar savings. The B Segment SUV programme is a year behind the C-SUV programme, he added.

Mahindra will utilise Ford’s unused manufacturing operations to expand its engine capacity. This exercise will provide a savings of about ₹400 crore on capex for Mahindra.

Also, Mahindra’s G12 engine is getting ready to go into a Ford vehicle from the first quarter of next year.

Meanwhile, the Competition Commission of India’s approval for the JV has been received a few days ago. “Now we are hoping that by May-end we should be completing the process for the joint venture,” said Goenka.

While announcing their joint venture during October 2019, the partners said the JV would look at introducing three new utility vehicles under the Ford brand, starting with a new mid-size sports utility vehicle that will have a common Mahindra product platform and powertrain.

Focus on e-vehicles

The JV will also focus on electric vehicles and both will collaborate to develop vehicles for sustainable mobility across emerging markets.

The joint venture will use the Ford brand distribution network in emerging markets to extend support for export of Mahindra products, in addition to Ford-branded vehicles.

Published on February 13, 2020

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