Mahindra and Ford sign agreement to share powertrains

On Wednesday the two major automobile companies, Mahindra Group and Ford Motor Company signed dual agreements to share powertrains in India. The two industry giants shall jointly develop a telematics control unit to aid their plans to co-develop a suite of connected car solutions. 

The $20.7-billion Mahindra Group and the US automobile company started this strategic partnership in September last year and disclosing this new venture they said that the two giants shall continue to explore new domains to take further their ambitious plans.

Pawan Goenka, managing director at Mahindra and Mahindra, said, “We are confident to meet customer expectations by working together on a number of joint development areas. Going forward we will continue to identify the synergies that exist between the two companies.” 

As per the guidelines in the agreement on powertrain sharing, Mahindra Group which has a net worth of $20.7-billion will build and supply a low-displacement petrol engine to Ford India. In a statement to Bombay stock Exchange Mahindra declared that this new engine will be used in its present and future vehicles, starting in 2020, Mahindra said in a statement to BSE. 

The BS-VI compliant powertrain will help Ford expand its present business. It will help Ford extend and strengthen its existing offering of petrol engines. Ford shall be able to upgrade its existing line of engines like the all-new three-cylinder TiVCT family. 

The telematics control unit will help the two companies extend their business through the connected vehicle solutions that would be deployed across both Mahindra and Ford vehicles.

As per the sources close to the developmental activities, both the groups are also working intensively on utilizing each other’s vehicle architectures to release a line of exclusive cars and SUVs in the future. 

Jim Farley, executive vice president at Ford Motor Company, said, “With our collaboration in powertrain and connected car solutions, we will deliver an affordable portfolio and enable our Indian consumers to get behind the wheel, feeling more confident and connected.” 

This partnership is a pact of mutual benefit as this agreement is expected to play a critical role in cost reduction and rationalization of investment for the future of both the giants. Also specifically speaking about Ford India, it has taken a very strategically beneficial move as this market operating model shall lead to a considerable cost reduction and hence is expected to increase its profit margin.

Ford and Mahindra are also focusing on utilizing each other's factory and sales network in India and other emerging markets. The two companies have already signed multiple MOUs since 2017 and are also working on jointly developing SUVs and a small electric vehicle.

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