Mahindra, Ford may firm up pact soon to ride together

Mahindra & Mahindra (M&M) and Ford India are likely to formalise a memorandum of understanding that they signed six months ago and establish a partnership in the coming week to 10 days, according to several people with knowledge of the matter.

They are likely to share vehicle architecture, electric powertrains, common sourcing and leverage each other’s distribution network in the first phase, they said.

Three to four of the eight broad areas of discussion that were in the September 2017 MoU are likely to be part of the partnership, they said.

A council has been formed with four representatives from each company to define its framework. M&M is likely to share its utility vehicle platform with Ford for a C-Segment SUV codenamed W601, which is a new-generation XUV, whereas M&M will get access to Ford’s B562 platform for an electric sedan that it plans. Coming together is expected to help shave the development timeline.“

The intent is to come out with these projects in a much faster timeframe than working on products or projects independently. These projects are likely to hit the road in the coming two to three years,” said one of the people cited above.

Amid-sized SUV is a critical gap in Ford India’s portfolio between the EcoSport and Endeavour, whereas Mahindra will need new-generation architecture to address the electric vehicle (EV) sedan portfolio for the future, especially for customers like Energy Efficiency Services Ltd, a joint venture of state-owned companies under the power ministry, which has floated a tender to buy electric vehicles for government use.

For Ford India, which has been working overtime to reduce cost and improve profitability, the lower cost structure of Mahindra & Mahindra is something the US car maker would like to emulate. Ford has already asked vendors to supply to both companies to equalise any cost difference on parts.

“At Ford, the belief is that the cost structure of Mahindra is a significant 12-14% lower than at Ford. The company already has got access to the cost structure at the vendors’ end and have requested them to come out with ways on which Ford can source parts at lower cost. One can understand if a specifically engineered part could cost higher, but how can some of commodity parts pricing be higher?” said one of the persons.

Mahindra & Mahindra and Ford didn’t respond to queries.

Ford India managing director Anurag Mehrotra told ET in February that talks were progressing well in the areas mentioned in the MoU but didn’t give any details. Mahindra & Mahindra entered into the accord with Ford Motor Co to explore cooperation in the sphere of products, technologies and distribution, including mobility programmes, connected vehicle projects and electrification of cars.

Interestingly, Mahindra & Mahindra recently invested in Zoomcars, a self-drive, rental service provider in which Ford India already had a stake.

Apart from giving access to each other’s vehicle architectures, powertrains and sourcing, Ford India is also likely to tap into the wide distribution network of Mahindra & Mahindra in the hinterland to access new markets.

After market leader Maruti Suzuki, Mahindra & Mahindra probably has the greatest rural reach in the country with the latter aspiring for a touch point every 25 kilometres.

The two sides can share costs and also work together on futuristic technologies related to mobility solutions and connected vehicle technology. Ford entered India in 1995 in partnership with Mahindra & Mahindra before going solo in 2005.