Ford to Collaborate With Mahindra & Mahindra on Sales, Technologies
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 sold roughly 87,000 vehicles in India last year, up 11% from 2015, according to WardsAuto.
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.
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(END) Dow Jones Newswires
September 18, 2017 14:10 ET (18:10 GMT)