Ford, Mahindra to enter strategic alliance; here's why

Mahindra and Ford Enter Alliance For Product Development

Mahindra and Ford join hands again, this time for electric vehicles

Ford Motor Co. and Indian automaker Mahindra and Mahindra Ltd. are exploring forming a strategic alliance as the USA automaker tries to gain a foothold in a country that's set to become the world's third-biggest vehicle market.

"The agreement between the two companies will allow each to leverage their mutual strengths during a period of unprecedented transformation in the global automotive industry", the two companies said in a joint statement.

"Teams from both companies will collaborate and work together for a period of up to three years". The company has invested more than $2 billion in India and plans further spending to establish a global engineering enter in Chennai to tweak products for the local market and more quickly adapt to changing consumer trends, Reuters reports.

The companies said in a joint statement on Monday the areas of potential cooperation include connected cars, mobility programs, electric vehicles and sourcing among other areas.

These strategic areas that Mahindra and Ford intend to cooperate on are listed below.

Ford and Mahindra say they would explore joint product development
Ford and Mahindra say they would explore joint product development

In the shorter term, Ford and Mahindra suggested they could benefit from collaborating on distribution of vehicles in India, pooling purchasing and collaborating on forays into ride services. Ford and Mahindra ended their partnership in 2005. The new partnership could prove critical for Ford, which had been considering exiting India despite the fact that many analysts believe the market could eventually be almost as large as China's. Hyundai is the second-largest brand, with a almost 17% share.

The first major decision Ford announced after Hackett, 62, became CEO also involved the automaker's operations in Asia. The company's gains in the region came from growing sales and market share in China, especially of its SUVs and Lincoln luxury models.

India has proved to be a tough environment for US automakers.

Toyota said last month it also planned to take a 5 percent share in smaller Japanese rival Mazda Motor (7261.T) as part of an alliance that will see the two build a $1.6 billion USA assembly plant and work together on electric vehicles. In June, the company scrapped a controversial plan to move production of Focus compact cars from MI to Mexico. "The memorandum of understanding we have signed today with Mahindra will allow us to work together to take advantage of the changes coming in the auto industry", he added. Pioneered by its former chief executive Mark Fields, Ford has technologies such as on-demand autonomous vehicles, cars which connect people with their homes, help them find a nearby restaurant while behind the wheel in an unfamiliar city, or using voice commands to control their favourite mobile app on the go. The Ford announcement "builds on the foundation laid through our past partnership with Ford and will open opportunities for both of us".

From April to end-August this year, Ford sold 36,703 passenger cars in India compared with Mahindra's 96,051.

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