Mahindra tie-up with Ford to enter new markets

Tinuku - Mahindra & Mahindra Ltd is exploring the feasibility of entering emerging markets such as Indonesia and Russia in partnership with Ford Motor Co. In September 2017, Ford and Mahindra said that they are exploring a strategic alliance to “leverage Ford’s global reach and expertise and Mahindra’s scale in India”.

“We are exploring various aspects with Ford manufacturing, sourcing, engineering or even on the retail front. But things are at a very initial stage in these markets to conclude what aspect we will be partnering on,” said Mahindra managing director Pawan Goenka.

Tinuku Mahindra tie-up with Ford to enter new markets

The company said the agreement would allow them to combine their strengths during a period of unprecedented upheaval in the automotive industry. If Goenka’s plans go through, Mahindra will be the first Indian automaker to strike such a global alliance.

A similar pact between Tata Motors Ltd and Volkswagen AG failed to make progress after an initial agreement. A wave of consolidation is sweeping through the sector. Toyota Motor Co. has bought Daihatsu, while Nissan has acquired Mitsubishi. General Motors Co. has pulled out of some key markets, including India and is doubling down on North America and China.

Mahindra has decided to develop products on a global scale, in collaboration with unit Mahindra Automotive North America (MANA) and iconic design firm Pininfarina SpA, Anand Mahindra, executive chairman of Mahindra, said at the launch of the Marazzo multi-purpose vehicle on Monday.

“The Marazzo is a proof of concept of Mahindra’s global network of R&D working together to deliver world-class products. We have the confidence that we can once again use this neural network (of development centres) to deliver.” Mahindra said.

The Marazzo was the first product to be jointly engineered by MANA in Detroit and the Mahindra group’s research and development centre, Mahindra Research Valley (MRV) in Chennai. Pininfarina, which Mahindra bought in December 2015, worked on the design in collaboration with Mahindra’s local design studio in Mumbai.

“The Marazzo is a proof of concept of Mahindra’s global network of R&D working together to deliver world-class products. We have the confidence that we can once again use this neural network (of development centres) to deliver.” Mahindra said.

The 1.5-litre, four-cylinder diesel engine on the Marazzo was jointly developed by MRV and Austria-based engineering and power train firm AVL List GmbH. Accordingly, Mahindra has already started development of another vehicle at MANA, which would see support from MRV, Pininfarina and Mahindra’s local design centre without disclosing further details, Goenka said,

The development of Marazzo started four years ago, coinciding with the setting up of MANA. With a new platform, drivetrain, engine and transmission, product development costs for the multi-purpose vehicle are about US$200 million. To compare, the Scorpio, launched in 2002 at Mahindra’s Nashik plant, was developed for US$120 million.

Product development is increasingly becoming expensive because of regulatory compliances, testing and validation, said Rajan Wadhera, president of the automotive division at Mahindra. More models on this new platform were under consideration, Wadhera said, adding that the compact sports utility vehicle code-named S201 to be launched this fiscal would be built on the platform with minimal changes.

With large families and businessmen as the target audience, Mahindra had set aside a fungible capacity of 8,000-9,000 units per month between the Marazzo and the S201, said Veejay Ram Nakra, senior vice-president, sales and marketing. Mahindra hopes to add 9,000-10,000 units to its monthly sales, with three launches planned this fiscal and sees “a substantial” increase in market share.

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