Mahindra and Mahindra Ltd. in India and Ford Motor Co. in Dearborn have signed a definitive agreement to create a joint venture that will develop, market, and distribute Ford brand vehicles in India, and Ford and Mahindra branded vehicles in emerging markets around the world.
The two companies will form a joint venture with Mahindra owning a 51 percent controlling stake and Ford owning a 49 percent stake.
Mahindra’s North American operations are based in Auburn Hills.
Ford will transfer its India operations to the joint venture, including its personnel and assembly plants in Chennai and Sanand. It will retain its Ford engine plant operations in Sanand as well as the global business services unit, Ford Credit, and Ford Smart Mobility.
The joint venture comes after a strategic alliance was formed between the two companies in September 2017 and is expected to be operational by mid-2020. It will be operationally managed by Mahindra, and its governance will be equally composed of representatives from both companies.
The joint venture will be responsible for growing the Ford brand in India and exporting its products to Ford entities globally. Ford will continue to own the Ford brand, and its branded vehicles will be distributed through the current Ford India dealer network. Mahindra will continue to own its brand and operate its own independent dealer network in India.
“At Ford, our purpose for 116 years has always been to drive human progress, and that won’t change,” says Jim Hackett, president and CEO of Ford. “Strong alliances like this play a crucial role in assuring we continue to achieve our vision while at the same time staying competitive and delivering value to our global stakeholders.”
The venture is expected to introduce three new utility vehicles under the Ford brand, beginning with a new midsize sports utility vehicle that will have a common Mahindra product platform and powertrain. The companies will also collaborate to develop electric vehicles.
Sourcing, product development, and access to technology are expected to be enhanced by the joint venture, which is also expected to achieve enhanced efficiencies to strengthen the Ford brand in India. The agreement will also be a catalyst for growth for the Ford and Mahindra brands in emerging markets, which are growing at double the rate of the global industry.
Extended support of Mahindra products and Ford branded vehicles will use the Ford brand distribution network. Exports form about 7 percent of Mahindra’s auto business revenue, and its products are sent to South Africa, Nepal, Bangladesh, Sri Lanka, Chile, and other countries.
“Emerging economies, including India, are expected to account for one in three future vehicle sales,” says Pawan Goenka, managing director of Mahindra. “The joint venture will have a distinct product portfolio with shared platforms and powertrains, the newest technology, high quality, and engineering standards from both Mahindra and Ford at optimized costs. This winning combination will enable the joint venture to successfully position its vehicles in India, as well as unlock the potential of other highly competitive emerging markets.”
Ford’s newly established international markets group business unit will play a role in the process. The group brings together 100 high-potential, emerged, and emerging markets including India, Australia, the Association of Southeast Asian Nations, the Middle East, Africa, and Russia. In addition to the established Ford Ranger and U.S. import businesses in the group, the formation of the joint venture will add to its portfolio vehicles tailored for emerging markets and places India at the center of Ford’s strategy for the group.
Mahindra has led the utility vehicles segment in India for the past seven decades. It is the only company offering a portfolio of electric vehicles commercially available in India. Mahindra also owns a majority stake in Ssangyong Motor Co. in Korea and has invested in ridesharing platforms in the U.S.
Ford was among the first automakers to enter India in 1995. It exports vehicles and engines from its facilities in the country. India is the third-largest Ford employee base globally, with more than 14,000 people working across Ford India and global business services operations. Under the new structure, Ford will continue its support for all corporate social responsibility initiatives.