Products From M&M Partnership To Play Key Role In Emerging Market Model: Ford India

Ford India expects upcoming products through partnership with Mahindra & Mahindra to play a significant role in its emerging market operating model that has helped it reduce costs, according to a top company official.

The company is likely to share “some updates” in “a short period of time” on five agreements that it had signed with M&M in March this year, which included development of two SUVs and a battery electric vehicle.

“The learnings that we had through the collaboration with Mahindra—benchmarking and discussions with them are also helping or reinforcing the emerging market principles we have,” Ford India President and Managing Director Anurag Mehrotra told PTI.

Ford India adopted its emerging market operating model in April 2017, using the country as a “test bed” and focussed on strong brand, right product, competitive costs and effective scale to strengthen its business.

Under the model, the company started measuring cost per units in manufacturing in India unlike hours per unit as is done in advanced markets.

“In the last two years, we have reduced our structural costs by about 40 percent,” he said.

Underlining the significance of the products from the alliance with M&M in Ford’s emerging market model, Mehrotra said, “The way it (alliance) will get executed, (the company) will be using the principles of emerging markets.”

Under their alliance, the two companies are looking at jointly developing a compact SUV, a mid-sized SUV, electric vehicle, power trains and connected vehicles.

When asked if the emerging market model in India could be taken to other similar markets globally, he said, “India is the first test bed. Depending on the success we get here, we are sure we will look at replicating some of the principles in other emerging markets.”

Highlighting the impact of the model, Mehrotra said in the financial year ended March 2018, Ford India’s revenues, including exports, were at about $4 billion.

“Domestic revenue crossed $1 billion for the first time and the top line has been growing at least in the last two years in the range of 15-20 percent a year,” he said.

Mehrotra said, “By ensuring that we are ruthless in executing the four pillars—strong brand, right product, competitive costs and effective scale—we have been able to not just grow the top line but also curtail our costs.”