The Indo-US joint venture company of Mahindra & Mahindra (M&M) and Ford Motor Company could potentially see the development of 10 new models, including those manufactured by M&M’s Korean subsidiary SsangYong.
M&M and Ford agreed to form a new company earlier this month, which would house almost all of Ford’s business assets based in India, including its two factories. The new company, which is controlled by M&M, has started work on a number of projects, some of which are yet to receive a formal approval.
Also read: M&M-Ford deal to lower costs by 40%, boost sourcing from common suppliers
Nine products, including those expected to be shared with SsangYong, powered by petrol and diesel engines will be shared between the two companies, while one will be an all-electric model, new details emerging from the agreement show.
Both companies will produce one mid-size SUV model (internally called C-SUV) and two smaller specification SUV (called B-SUV) each. M&M could also lend an MPV platform like the Marazzo to Ford.
Pawan Goenka, Managing Director, M&M, said, “Ford will have two products coming out of the B-SUV platform, which will be after the C-SUV launch, and Mahindra will do at least one or may be two products. This is a work in progress and not formally approved by the managements of both companies. There could be an MPV coming out of an Mahindra platform, which will be used by Ford in India and globally.”
M&M's Korean subsidiary SsangYong Motor Company, which is stronger in Korea and China and where the company’s presence is low, could join the Ford-Mahindra league to make it a tripartite venture.
“There is a possibility that products of the JV will be relevant for SsangYong also. In that case, we may end up developing three products using the same platform. SsangYong’s manufacturing base is in Korea while that of Ford and M&M is in India. Therefore, the tooling benefit that Ford and M&M would earn will not be there for SsangYong,” Goenka added.
The third initiative that the two companies are pursuing, but which has yet to be formally approved by both managements is a battery electric vehicle built on Ford's Aspire platform.
Using its low-cost product and manufacturing base, M&M will convert one car of Ford to a battery-powered vehicle. Ford’s electric vehicle technology is proving to be too expensive for the Indian market and cannot be used for its electric conversion plans.
“It won’t be the Aspire that Ford sells in India, but a different version of the same car. We cannot give you a timeline for its launch since we don’t have a formal approval,” Goenka explained.
M&M has agreed to pump in up to Rs 1,400 crore, including the Rs 657 crore that it has agreed to pay for the 51 percent stake in the joint venture company. Thus, about Rs 743 crore could be used to develop new products.
“The two partners have a commitment in the JV company beyond that stake purchase. If all the products that we have talked about get approved, then we have a commitment from our partner to support that investment either through equity or debt,” Goenka said.
The two companies (with a total capacity of 1.2 million units per annum) have a clearly defined plan as far as manufacturing activities are concerned. M&M will build additional products that are not relevant to the JV.
The C-SUV will be produce at M&M's plant while the B-SUV will be rolled out from Ford's plant for both companies.
“Capacity at M&M and at Ford's plants will be used interchangeably as may be required. If there is a justification of making a product at the JV plant that is not part of the JV, then we will do that. But it will be an arm’s length manufacturing contract,” Goenka stated.
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