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For M&M, alliance with Ford marks new growth phase

| Updated on April 11, 2019 Published on April 11, 2019

Economies of scale will now be possible

Mahindra & Mahindra will play a pivotal role in the partnership with Ford, at least going by the fact that it will be the larger shareholder with 51 per cent stake.

For now, there has been no official confirmation coming in from the companies but Reuters has stated that this is likely to happen in the next 90 days. The two had already decided to team up for initiatives in the electric mobility space as well as new platforms two years ago but the joint venture will take the bonding to the next level.

For M&M, this will mean a massive evolution from the time it first teamed up with Ford in the mid-1990s to keep pace with other Indian companies who were throwing their hats into the glamorous automobile arena. M&M was, in fact, tipped to partner Chrysler initially for the Cherokee but opted for Ford in a dramatic turn of events.

The partnership lasted a few years by which time M&M had prioritised the SUV space as its focus area. It had already kicked off work on Project Scorpio which was destined to change the face of the company and take it to new heights.

Yet, the company did not take too long before it re-entered cars, this time for a 51:49 joint venture with Renault to make the Logan at its Nashik facility. A lot was expected from the entry-level sedan and, at one point, it seemed as if the partners were planning bigger things with an all-new facility in Chennai along with Nissan.

While the Logan did not deliver to potential, M&M also steered clear of the Chennai project, which ended up being the first global manufacturing footprint for Renault-Nissan. The Logan alliance came to an end and M&M brought back the vehicle in its new avatar as the Verito. It was also around this time that SsangYong Motors was in the hunt for a new owner and this is when M&M made a successful bid. There was a lot of hard work ahead in turning the company around but the efforts have paid off now. Today, M&M and SsangYong have been collaborating on platforms and the latest effort of this bonding is the recently launched XUV300.

The Indian SUV-maker has also bought out Pininfarina, the Italian car design firm, while setting up a footprint in North America with MANA (Mahindra Automotive North America). The integration of teams has helped in the creation of products like Marazzo with perhaps more in the pipeline. Ford will be another big step forward for M&M since there are a host of challenges emerging in the mobility landscape. Joint efforts will help cut costs while the frugal engineering competencies built in India will be a win-win for the partners.

Scale is paramount to both Ford and M&M. It will be interesting to see how the alliance evolves going forward. Will the two continue to jointly pool in skills or look at the option of buying out the other’s stake eventually? These are unpredictable times for the auto industry but the harsh reality is that it’s better to join hands rather than fight it out alone.

Published on April 11, 2019
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