Ford announces JV with Mahindra
Ford was one of the first global OEMs to set foot on the ground in India, but has been struggling – like most other Western manufacturers – to deliver the volumes it had hoped and planned for. India is a particular market, with a different need (small and cheap cars) and high import taxes. For any OEM, being successful doesn’t only require to be local, but also to offer products that need to be developed for the local market. In other words: it’s expensive to start up operations and margins are small.
Ford has understood this and has earlier this week announced a new joint venture with local carmaker Mahindra & Mahindra Ltd. Ford will transfer part of its India operations to the joint venture; this includes all staff and its 2 assembly plants in Chennai and Sanand. The engine plant in Sanand, the Global Business Services unit, Ford Credit and Ford Smart Mobility will however be retained under the Ford umbrella.
Anand Mahindra, Chairman of the group, describes the move as follows: "Rather than this being a parting, this is like two old friends deciding it makes sense to move into a new house together to pool our talents and share the benefits.” Jim Hackett, Ford’s CEO adds: “I think we probably made some errors in thinking about what was a North American business model and sticking it in India.”
Hackett has been focusing, since his appointment, on Ford’s operational fitness around the globe. One of his achievements so far has been the Ford-VW global alliance, aiming for cost sharing and shared development with the German giant.
What’s to come?
Combined, the 2 brands will have a market share of 14%, up from Ford’s 3% market share today. There are no plans for joint branding; the vehicles will be either Ford or Mahindra branded. In exchange, 3 Ford utility vehicles will be developed, including one midsize SUV that will share platform and powertrains amongst the 2 brands. There are also plans for an EV with a Ford platform and a Mahindra electric powertrain.