Following the news that the Competition Commission of India (CCI) has approved the formation of a joint venture (JV), Ardour Automotive Private Limited, between Mahindra & Mahindra and Ford Motor, and the transfer of the automotive business of Ford India to the JV
Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:
“The regulatory clearance, which marks a noteworthy development in the Indian automotive industry, comes as a next step to the strategic alliance established between the two companies in 2017. Mahindra will own 51% in Ardour Automotive Private Limited and Ford the remaining 49%. The new entity will work to co-develop new products; new technologies while optimising the R&D and sourcing costs. The JV will focus on the co-development of compact and mid-size sports utility vehicles (SUVs) in the Indian market.
“Interestingly, the SUVs will have shared platforms and powertrain but there will be no cross-badging of products and both brands will co-exist independently with their own distribution network. In order to optimise the operational efficiency, the JV will combine production capacity, product development capabilities and sourcing to reduce the costs. The JV will focus on exporting Ford vehicles to other geographies.
“From the technological standpoint, the JV will leverage Ford’s existing capability in the connected car space and Mahindra’s expertise to develop cost efficient electric vehicles. The companies have announced that they would co-develop a suite of connected car solutions for consumers while Mahindra is reportedly working on developing an electric vehicle using Ford’s Aspire platform.
“Ford intends to leverage Mahindra’s knowledge of the Indian market and develop affordable vehicles that can generate higher volumes. In addition, Ford will distribute vehicles of SsangYong—owned by Mahindra—apart from manufacturing its own vehicles at Ssangyong’s plant in Pyeongtaek, South Korea. On the other hand, Mahindra looks to benefit from Ford’s global presence and technological expertise to enter into new emerging markets in South Asia.
“The JV, which offers significant benefits to all stakeholders, is key for the growth of the Indian automotive industry as it will help in the reduction of costs, increasing revenues/profits as well as reach and introduction of better, safer and greener vehicles.”