Ford to Collaborate With Mahindra & Mahindra on Sales, Technologies -- Update
September 18 2017 - 2:56PM
Dow Jones News
By Christina Rogers
Ford Motor Co. again is distancing itself from crosstown rival
General Motors Co., saying it will work with an Indian auto maker
on boosting its prospects in an important emerging market where
profits have been hard to come by.
Ford said Monday that it is linking up with Indian auto maker
Mahindra & Mahindra Ltd. in a three-year partnership to explore
potential areas of collaboration on new technologies and retail
sales. Such areas could include everything from codeveloping
electric vehicles to collaborating on new mobility ventures and
connected-car services. Ford also is looking at ways to leverage
the two companies' dealer networks to expand into new markets.
Ford's move closely follows GM's exit from India, where the auto
maker will stop selling vehicles so it can redirect investment to
more lucrative markets. GM is also spending heavily on
autonomous-vehicle and electric-car development.
Mahindra is a well-known player in India, which is the world's
fifth-largest car market by sales, but the company has struggled to
establish itself and its lineup of rugged SUVs in mature
markets.
Mahindra is known for taking a frugal approach to engineering,
including being able to develop vehicles that can appeal to
budget-minded buyers, and that could help Ford as it looks to
improve its oversight of development costs. As regulatory demands
increase in markets like India, Mahindra and its rivals have been
hiring engineers in markets like the U.S. and seeking
partnerships.
Ford is hoping the partnership will help it trim costs in India,
a once-promising market that lately has become a drain on resources
for many car makers struggling to turn a profit there. While
new-car demand continues to grow, the market remains overcrowded
with competitors trying to sell low-price cars that return only
slim margins.
Ford Global Markets Chief Jim Farley said the car maker has made
significant headway in establishing the Ford brand among consumers
in India but needs to work on the cost-side of the equation.
"We're looking at this pretty broad in scope," Mr. Farley said
of the Mahindra partnership. He declined to give specifics, saying
the memorandum of understanding was only recently signed.
Ford remains a small player in India, where Asian car makers
Hyundai Motor Co. and Suzuki Motor Corp. dominate the marketplace
with the kinds of low-price models that appeal to Indian buyers --
many of them purchasing a car for the first time.
Ford's market share in India is 2.5%. Last year, it sold roughly
87,000 vehicles in the country, up 11% from 2015, according to
WardsAuto. Mahindra is much larger, selling over 400,000 vehicles
in India last year. Its market share is just under 8%.
For nearly a year Ford has flagged India as a challenge. The
company has declined to say whether it is losing money in the
country, but in March, Ford Chief Financial Officer Bob Shanks said
the crowded market and weak pricing was making India "very
difficult" and Ford's approach "needs to change."
Ford also is investing in two other markets GM abandoned:
Western Europe and Russia.
Write to Christina Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
September 18, 2017 14:41 ET (18:41 GMT)
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