Auto focus

Partnerships are inevitable in today’s world

Murali Gopalan | Updated on November 21, 2019

M&M office. file photo   -  REUTERS

Companies will find it difficult to stand on their own feet otherwise

Pawan Goenka makes no bones about the fact that partnerships are inevitable in today’s rapidly changing automotive landscape.

“From Mahindra’s side, as we look at the automotive business overall globally, it’s becoming very clear that even large players find it difficult to remain small scale,” says the Managing Director of M&M.

And if small scale is defined as selling nearly three million vehicles, it is a no-brainer that a company like M&M would need an ally.

“If we ever think that we can do without it, we are being foolhardy. One has to accept that in the emerging scenario, all players need partnerships,” says Goenka.

As he reasons, this is a global business by the end of the day. Even if a company does not export a single vehicle, it is still in a global arena since it is competing with MNCs in India. “It does matter whether you are selling in one, two, five countries or 30 countries… alliances are a must,” he reiterates.

There are a whole lot of examples already mushrooming across the world. Toyota and Suzuki have joined hands for India and other emerging markets while Fiat Chrysler Automobiles and Groupe PSA have decided to merge. Ford, incidentally, has also teamed up with Volkswagen for pickups and electric mobility in Europe. In Goenka’s view, there could not have been a better cultural fit for M&M than Ford given the fact that they were allies nearly two decades ago before amicably parting ways to focus on their individual priorities.

The ‘cultural fit’

Goenka says the other important aspect of the ‘cultural fit’ issue is that both M&M and Ford are promoter-led where there is a Bill Ford and Anand Mahindra who can “come together and talk.. resolve things or give directions”. This cannot happen in professional-led companies where CEOs come and go.

This joint venture is also different from what M&M had done earlier with Renault or with Navistar. Those were India-centric and one-product JVs where the multinational partners used this as a route to enter India. In its turn, M&M leveraged the alliances to learn more about the auto industry and its various aspects. To that extent, the focus was short-term and limited to the scope defined. However, the JV with Ford is different in that it is not just India-centric.

“We would expect that at any given point of time, the export volumes will be higher than domestic numbers as has been the case with Ford historically, in India. There are also multiple products and continuous product development,” elaborates Goenka. By the end of the day, it is a story of two former partners coming together on a foundation of mutual trust and respect for each other’s competencies. As he says, it is a case of equal partners who individually bring a lot of value to the table.

“Let's combine together and create a lot more value,” says an optimistic Goenka on the rationale of combing strengths for a common goal. If things go according to plan, the sky is the limit for both companies. “We can share plants, sourcing, suppliers, network…” he adds.

Published on November 21, 2019

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