By Daniel Alvarez,
Money and Investing Writer
The American powerhouse, Ford, (NYSE:F) and one of India’s top automobile manufacturers, Mahindra, (NSE:M&M) will rekindle an alliance that ended in 2005. Both look to benefit from each other’s strengths as Ford seeks to expand in India and Mahindra has its goals set on expanding its reach outside the country. They will work together to explore areas such as mobility programs, electrification, sourcing and expansion.
“Ford is committed to India and this alliance can help us deliver the best vehicles and services to customers while profitably growing in the world’s fifth largest vehicle market,” said Jim Farley, Ford executive vice president and president of global markets.
India is one of the fastest growing auto markets in the world. Most foreign auto makers have struggled in India including Ford who has been trying to make an imprint on the India market since 1995 when the prior alliance began. Also, one of Ford’s top competitors in General Motors Company said it stop sales in the Indian market. This just goes to show the difficulty of foreign market entry. Ford’s market share in India was 3 percent while Mahindra had about 7.8 percent in the financial year ended March 2017.
The auto industry is changing with new technology that includes the electrification of automobiles. One of the leading innovators in electric cars in the US market is Tesla, however their technology has proven to be too expensive for Indian markets.
Also, policy makers in India, as well as China and Europe, have signaled that they want the industry to phase out of diesel and gasoline vehicles over the next two decades. With the new alliance Ford can compete in the Indian market for electric cars as they can benefit from Mahindra’s lithium-ion battery which reduced costs.
Mahindra is also the only Indian automaker that makes electric cars, and at a fraction of the cost of global brands such as Tesla and an agreement would give Ford access to the cheap technology. Mahindra on the other hand will be given access to new designs and global markets.
Pawan Goenka, managing director of Mahindra, said, “The changes facing the automotive industry globally are triggered by the accelerated rise of new technologies, sustainability policies and new models of urban shared mobility. Given these changes, we see the need to anticipate new market trends, explore alternatives and look for ways to collaborate even as we compete and build powerful synergies that will allow rapid exploitation of the exciting new opportunities.
Today’s announcement builds on the foundation laid through our past partnership with Ford and will open opportunities for both of us.”
A version of this article appeared in the Tuesday, September 26th print edition.
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