M&M, Ford Tie Up To Make Mid-Sized Sports Utility Vehicle
Mahindra & Mahindra Ltd. and Ford India Pvt. Ltd. agreed to jointly develop a mid-sized sports utility vehicle.
Ford will incur development costs of Rs 680 crore on the new C-SUV under a 10-year agreement, M&M said in an exchange filing. The vehicle will have a Mahindra platform and powertrain.
Ford can utilise Mahindra’s extensive dealership network, while the maker of XUV 500 would benefit from product quality expertise and brand name of the U.S. auto major, said Ankit Merchant, auto analyst at SMC Institutional Equities. “M&M, which was considered one of the top leaders in SUV market started losing its sheen in the last 2-3 years due to intense competition, this deal to an extent may help the company regain its lost glory.”
The companies, which in September 2017 announced a strategic alliance to build electric cars and SUVs, are looking to claw back share in one of the largest auto markets in the world. While M&M faces a stiff challenge from the Maruti Suzuki India Ltd. in the utility vehicle segment, Ford has been struggling to boost sales.
M&M said there is potential for shared investment, economies of scale, technology sharing and higher efficiencies in areas like product development. “Having identified several areas for joint development, both companies will continue to work together to develop products using common product platforms,” Pawan Goenka, managing director at M&M, said. “This will reduce product development costs and gain economies of scale for both companies.”