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Old 3rd March 2017, 10:36   #1
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Default Rumour: Mahindra to tie up with Ford for car manufacturing

As per ET Auto's sources, homegrown auto major Mahindra & Mahindra (M&M) is in talks with Ford India to use the American car company's Chennai plant for manufacturing it's passenger vehicles. The talks are said to be at an "advanced" stage and both sides have made good progress on reaching an agreement.

The discussion is centered around utilising the idle capacities of Ford's Chennai plant for manufacturing M&M cars, which will be mutually beneficial for both companies, according to sources.

The Chennai plant has an annual capacity of producing 2 lakh cars, but currently only 1.2 lakh units are being produced. Even Ford's Sanand plant is running at around 60% capacity.

M&M had a tie-up with Ford earlier in the 1990s, during which the Ford Escort sedan was launched in India.

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The deal, if it goes through, will create substantial financial synergies and benefits for the two companies, while creating the possibility of a larger partnership involving technologies and products (though this is not part of the current discussions).

The talks are at an advanced stage, and several rounds of discussions have already taken place,“ a top source in one of the companies told TOI.

When contacted, M&M managing director Pawan Goenka did not confirm, or deny, any such development. “At any given point of time, we are talking to different original equipment manufacturers (OEMs) for various possibilities, which can include sharing of platforms, (production) capacities or dealer network. However, I cannot confirm whether we are talking to Ford, or whether we are not talking to them,“ Goenka said.

Sources said Ford had also initiated similar contract-manufacturing talks for the Chennai plant with Changan Automobile, its joint venture partner in China. “However, discussions seem to have gone cold, especially as there has been significant progress in talks with M&M,“ a source said.
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Old 3rd March 2017, 10:52   #2
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Default re: Rumour: Mahindra to tie up with Ford for car manufacturing

This is good news. Back in 1995-96, when Ford entered India with Ford Escort, then had a tie up with Mahindra and the entity was called Mahindra Ford India Limited (MFIL) and the Escorts were manufactured at the chennai plant. They are now going back to their roots. During that time, MFIL was one of the companies that were following very strict quality guidelines and vendors were made to follow QS 9000 standards.
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Old 3rd March 2017, 11:21   #3
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Default re: Rumour: Mahindra to tie up with Ford for car manufacturing

The news is all over TOI's Pune edition today morning. Though seems a good news for Indian automotive scene, but the question arises, why so suddenly M&M needs the additional space ?
Certainly, the facility shall be used for passenger vehicles and there isn't any news of any new launches from Mahindra' stable. Also, nothing is out there to suspect they are going to get big orders in their current portfolio.
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Old 4th March 2017, 11:45   #4
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Default re: Rumour: Mahindra to tie up with Ford for car manufacturing

This is good news for both Ford & Mahindra!

I think the Indian automobile industry is now set for a phase of consolidatory expansion, for want of a better phase:

--> (1) New entrants are entering the market, but are not investing big in greenfield plants themselves. Instead, they're choosing to build partnerships/JVs or strike deals with some existing manufacturers.

--> (2) Investment in new greenfield plants is being done by a few companies.

--> (3) Partnerships & collaborative deals are being struck among the remaining existing players.

Examples of type (1) are Peugeot-Citroën striking a deal with HM & Avtec and SAIC entering India with the MG brand by purchasing GM's Halol plant.

Examples of type (2) are Suzuki's new plant in Gujarat and Kia's expected entry. Suzuki has started building vehicles for Maruti Suzuki, apart from exporting them. Kia may be a new entrant technically, but they are a part of the Hyundai Motor Group.

Examples of type (3) are this expected Mahindra-Ford collaboration and also the expected Tata-Volkswagen collaboration.

Ford entered India through a JV with Mahindra, so the two should have no problems in making this deal work.

Ford benefits by putting the remaining idle capacity at their plant to good use. But what does Mahindra gain from this deal?

I'm not sure, but I think Mahindra themselves are not running their plant(s) at full capacity. So why should they try to utilise the idle capacity of another manufacturer instead of utilising their own idle capacity first???

I guess this deal may involve more than what meets the eye.

Mahindra's strength has been, and continues to be UVs. They were doing very well in the market as there weren't too many competitors in the UV space (compared to cars), apart from Tata and to a certain extent Toyota. But now, every manufacturer worth their salt has entered this space and the ones who haven't will do so soon as well, apart from new entrants.

This has reflected in Mahindra's marketshare coming under intense pressure now, with Tata even briefly dislodging them from their established 3rd position (albeit for only one demonetised month in Nov. 2016).

This must have set the alarm bells ringing at Mahindra. Yes, they own SsangYong and can draw on their expertise with UVs, but only the Tivoli would be suited for India (apart from the new products under joint development).

Intense competition in the UV space aside, Tata's expected collaboration with Volkswagen would have also got them thinking. If Tata can join hands with another international manufacturer who hasn't lived up to expectations in India (in terms of sales), then why shouldn't Mahindra? So they ended up making a call to their former partner, who must have welcomed them with open arms.

Last edited by RSR : 4th March 2017 at 12:03.
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Old 4th March 2017, 13:16   #5
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Default Re: Rumour: Mahindra to tie up with Ford for car manufacturing

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Originally Posted by Blr_RK View Post
then had a tie up with Mahindra and the entity was called Mahindra Ford India Limited (MFIL) and the Escorts were manufactured at the chennai plant.
The Ford Escort was manufactured at the Nashik plant (now fully owned by Mahindra). At the time, all Mahindra was making were old jugaad Jeeps. Mahindra learned a lot about modern manufacturing processes from their Ford partnership. I remember a senior executive saying that the Scorpio wouldn't have been possible if it weren't for the know-how gained from MFIL.
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Old 4th March 2017, 15:16   #6
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Default Re: Rumour: Mahindra to tie up with Ford for car manufacturing

It's a welcome joint venture and has advantages for both the companies.

For Mahindra, hopefully learnings from Ford can help them make more dynamically polished cars.

For Ford, it can result in made in India hardcore SUV unlike the hatchback on steroids EcoSport.

Will be interesting to see what this culmination brings to the table.
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Old 4th March 2017, 15:32   #7
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Default Re: Rumour: Mahindra to tie up with Ford for car manufacturing

I will also say it should be good for both M&M and the Indian customer. Ford can guard their own interests. Looks like a win-win situation. With pollution as well as impact requirements becoming increasingly tougher I doubt whether most of the Indian manufacturers have the demands to justify the investments.
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Old 4th March 2017, 17:06   #8
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Default Re: Rumour: Mahindra to tie up with Ford for car manufacturing

This is such a wonderful development for the Indian auto industry!
It gives Mahindra and Ford better economies of scale with lesser risk.
Ford, being a one trick pony, needn't take the extra risk of investing entirely in new production lines. And Mahindra gets to learn and improve as they always have been!

As much as I'm at awe at Maruthi and the incredible run they are having in our market. I think we need a shake up in the market. Competent products like the figo twins deserve more sales! This gives these manufacturers a chance to reduce overheads, keep releasing competent products and wait for the leader to falter! The same with the rumored tie up between tata and VW as well.
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Old 6th March 2017, 21:22   #9
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Default Re: Rumour: Mahindra to tie up with Ford for car manufacturing

Any tie-up between Mahindra/Tata on the one hand and a global major on the other shall not work out.
These 2 companies don't like playing second fiddle. See the way their collaborations have always worked out. This is more so when they are building same type of products targeting the same category of people. Tata-Mercedes worked because of the difference in target clientele.
I don't understand how this tie-up is good, unless it entails sharing at the dealership level. Almost all companies have idle capacity in their factories.

For companies to survive and prosper, they should start allowing multi-brand dealerships and/or ASS centres. This shall help bring down costs especially with multi-brand authorised work-shops. I don't know how well Carnation is doing but the consolidation has to take place at the dealer level. Why can't VAG share its workshops between all its brands, thus bringing volumes to the service provider and hence incentivising him in having trained mechanics?

I think Mahindra and Ford might be working on the same lines as their products, except Ecosport, don't overlap (The Rexton doesn't count!). Many Ford dealerships have shutdown recently due to lack of volumes, prompting this move.
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Old 6th March 2017, 23:00   #10
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Firstly the tie up between Mahindra and Ford seems to be largely based on sharing production capacities and nothing more than that, at least that's not what media is reporting as of now. Maybe Mahindra wants to build cars that require certain infra and ford has them idle, so it's like contract manufacturing. There is no JV or anything like that being reported until now.

On the other hand Tata and VW may venture on to platform sharing and resource sharing, so VW may get access to a low cost platform from Tata and Tata may get access to some engines and drive trains from
VW, again this is what has been reported until now, details not clear as yet.
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Old 6th March 2017, 23:46   #11
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Default Re: Rumour: Mahindra to tie up with Ford for car manufacturing

Off late, Ford is getting largely influenced by manufacturers in our market for all the wrong reasons. I am looking straight at the new Figo twins - with the latest disappointment coming from Global NCAP today. So, I really hope Ford doesn't learn any new tricks about vehicle design or build from Mahindra with this tie up. Especially the former.
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Old 7th March 2017, 01:05   #12
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Default Re: Rumour: Mahindra to tie up with Ford for car manufacturing

Pardon my naive question, why did Ford build a Sanand plant when their Madras plant was running at 60% capacity?

I see M&M getting another manufacturing facility closer to their R&D centre at Mahindra City (apart from their R&D and manufacturing facility at Nasik). What does Ford gain, apart from their plant utilisation?
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Old 7th March 2017, 21:05   #13
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Default Re: Rumour: Mahindra to tie up with Ford for car manufacturing

Ford is in the limelight for Pricing blunders(Endeavour), Marketing goof-ups and Feature deletions to name a few. Its high time Ford's management focus on profitable product lines and a consistent marketing strategy.
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Old 16th March 2017, 06:40   #14
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Default Re: Rumour: Mahindra to tie up with Ford for car manufacturing

Some more details of the impending partnership have been discussed in today's TOI.
Quote:
..it now emerges that the contours of the proposed partnership go much beyond capacity sharing alone. Sources say the two auto majors are talking about a global alliance that would focus on joint technology, product and component development. However, highly placed sources said the “talks are at a very preliminary stage and the contours of the discussion are still hazy.“...

The talks are focused around technology and product development with Mahindra's Detroit tech centre, Mahindra North American Technical Centre (MNATC), playing a critical role...

Sources say the tech talk with Ford Motor Company is part of Group Mahindra's global ambitions. The company has been focusing on global products in its auto, two-wheeler and farm equipment sectors. In auto, it is planning a fresh foray into the US market through both Mahindra-badged off-roader developed by MNATC as well as a US debut for Korean group company Ssangyong.

In tractor and farm equipment, it went in for three global deals * first with Mitsubishi Agricultural Machinery in 2015, then with Finland's Sampo Rosenlew Oy in 2016 and most recently Turkey's Hisarlar Makina Sanayi ve Ticaret Anonim S irketi.And in two-wheelers, the Peugeot range is being lined up targeting South East Asian markets.
Full article at: http://epaperbeta.timesofindia.com/A...16032017016058
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