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The sharing of vehicle architecture, though, will save over $200 million in the next two to three years, said people in the know.
Pawan Goenka, managing director of Mahindra & Mahindra, told
ET that although the JV partners will bring both businesses closer on product development, sourcing and technology, they will retain independent product DNA without resorting to cross-badging.
“We will not do badge-engineering. The customers will see through it and it just becomes a gimmicky thing,” he said.
“We will do totally independent products; if you didn’t know it, you wouldn’t know that both products are based on a common architecture. Both companies can retain their own DNA and be differentiated, yet share a lot in common,” he added.
For the overseas market, however, the US partner is considering using Mahindra products and re-badge them as Ford to expand its emerging market business, Goenka said.
To be sure, attempts at crossbadging by the Volkswagen Group with Vento and the Rapid sedan, or the Renault-Nissan alliance with Duster and Terrano SUV, and the recent effort by Maruti Suzuki and Toyota to rebadge the Baleno hatchback as Toyota Glanza has impacted the individual brands.
As product lifecycles shrink and the novelty of new products wane within six months, vehicle makers have had to constantly upgrade and launch new products.
Goenka said the JV will help accelerate product launches and plug gaps in its portfolio.
It was announced earlier that a ‘C segment’ SUV based on the new generation Mahindra XUV 500 architecture — codenamed W601 — will be shared with Ford, which is internally calling it as W605. The sharing of a ‘B segment mid-size SUV’ based on Ford architecture with Mahindra, is in the final stages of approval. Mahindra will also source the Ford’s Aspire EV.
By sharing vehicle architecture, both the companies will individually save about Rs 400 crore on one product each.
Mahindra has lost its leadership position in the utility vehicles segment to Maruti Suzuki and Hyundai, but with more than a dozen product launches planned in the coming year, it aims to claw back market share with competitive products at frequent intervals and also make money due to the synergies of common platforms and sourcing.
Additionally, Mahindra-Ford’s combined sourcing of Rs 47,000 crore will add another 1-2% savings to the material cost and directly add to the bottomline of the JV company.
Mahindra also gets access to Ford’s global sourcing capability, including China and other emerging markets, helping it in high-tech product sourcing where it has limited access. In domestic sourcing, however, Mahindra clearly has an edge.
Beyond joint product development, there is a lot of work going on in plotting the new growth markets of the future.
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