Ford Motor Company last month announced that it had signed multiple memoranda of understanding with Indian automaker Mahindra & Mahindra, outlining guidelines for the two companies’ collaborative efforts to develop new vehicles and technologies for the Indian market. Specifically, Ford an Mahindra plan to collaborate on development of a new mid-size SUV based on a Mahindra platform, which will be sold under two different brands, and a suite of connected car solutions.
But why pen a deal with the Indian automaker? The answer is simple: Ford has invested about $2 billion into its Indian operations since rejoining that market in 1995, yet has struggled to increase its market share beyond about three percent. With a large population, a rapidly-growing economy, a low current vehicle ownership rate, and an expanding middle class, India is expected to surpass Japan as the third-largest vehicle market in the world within the next few years, the Detroit Free Press reports. New vehicle sales could double to roughly six million a year over the same time.
India has proven a difficult market to tap, however, and General Motors last year even withdrew completely after more than two decades of operation in the country. Prior to its exit, the automaker dropped below a one-percent market share. The two dominant manufacturers in India, Suzuki and Hyundai, appear to have a firm grip on Indian car shoppers.
Ford has seen some success in the past, notably with its Figo small car and its diminutive EcoSport crossover. But the automaker’s lineup is sparse, bigger margins seem to go hand-in-hand with bigger vehicles, and Ford could use a more-profitable success story – like a mid-size SUV – in the market. According to the Free Press, Ford is also looking to introduce some budget electrified vehicles as the Indian government moves toward making them mandatory in 2030, and the automaker could gain a lot from access to the same affordable suppliers Mahindra has partnered with.
For Mahindra, the Free Press says, a collaboration with Ford could help the company refine its products and gain knowledge and insight with regard to vehicle development, especially in the area of off-roading vehicles. The Indian automaker may also be eyeing future cooperative opportunities in export markets such as Africa.