Here’s Why Ford Motors Is Entering Into A Strategic Partnership With Mahindra Group In India

by Trefis Team
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As foreign automakers look to navigate the fast growing Indian automotive market, collaborations with local players are becoming increasingly popular to develop a competitive edge. Recently, Ford Motor Company (NYSE: F) announced that it is exploring a strategic alliance with the Mahindra group in India in the areas of mobility, electrification, and product development. Under this agreement the two companies would leverage their strengths collaborating and working together for a period of three years. This will give Ford a better handle over the Indian market and help the Mahindra group to expand into other emerging global markets. This announcement comes after Volkswagen was exploring a partnership with Tata Motors in India and General Motors announced that it won’t be selling any vehicles in the region. While the Indian automotive industry is expanding rapidly, demand for budget cars from first time buyers is increasing. Ford is looking to capture the demand for affordable electric vehicles and the growth potential in the sports utility segment and a partnership with the Mahindra group, which is the leading utility vehicles manufacturer in the region, can help in achieving this goal.

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Collaboration To Build A Competitive Edge

Ford Motors and the Mahindra Group have entered into partnerships earlier, too, however the changing landscape of the automotive industry makes this collaboration more critical. Ford has a 3% market share in India and a partnership with Mahindra can help the company expand its distribution network and lower its distribution costs. Further, fast growing markets such as India and China are looking for cheaper and clean energy vehicles, where Mahindra’s designs can benefit Ford. With its mobility initiatives, Ford can extend its technology expertise to Mahindra and both companies can work on products which are useful for emerging economies. Ford is also setting up production units in China and India and the collaboration can help the companies build manufacturing synergies.

With technology disrupting the automotive landscape, companies are looking at ways to build a competitive edge with players such as Apple and Google looking to enter the autonomous car segment. Partnerships and collaborations can ensure that companies bring their expertise together to navigate this changing landscape better.

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