Mahindra Says JVs Don't Mean Walking Hand in Hand Into Sunset, Forever

New Delhi: With a list of courtships with some of the glamorous global automotive brands - Ford, Renault and Navistar - behind, Mahindra Group chairman and managing director Anand Mahindra has said such partnerships have shelf life.

 

"You must understand, JVs by nature are creatures of short duration. They are created because the two sides have some particular goals and the goals are different for the different partners and when the goals are realised, the JV has a half-life," Mr Mahindra told PTI in an interview.

 

M&M had partnered with Ford from October 1995 to March 1998 to make and sell cars. It had a JV with Renault between June 2005 and August 2010 to manufacture and sell the Logan sedan.

 

While in the commercial vehicles segment, Mahindra had partnered with US firm Navistar from November 2005 to February 2013, its partnership with BAE Systems - in the defence segment - lasted from 2009 to 2013.

 

Explaining why the homegrown $16.5-billion group has had a history of short JVs, he said, "In the old days, Indians used to think they (JVs) are like: 'we will walk hand in hand into the sunset, forever'. That was only because the JV partner had no choice, they were not allowed to invest in India. The moment, they were allowed to invest, JVs became vehicle of convenience."

 

Citing the example of the JV with Ford, Mr Mahindra said it was because the US auto major did not know India then. "They needed somebody to 'escort' them into India. That's why we made the Escort car."

 

Explaining the gains that the M&M group had from such partnerships, he said, "What was it for us then, people forget. Before we did the Ford JV, we only made soft top vehicles. If we hadn't had that JV, we would never have been able to make Scorpio. The same facility that made Ford Escort vehicle in Nasik, the same work force, the same engineers built the Scorpio and assembled them."

 

He said the same was also with French auto major Renault. "We went to a different level in quality (after Renault JV)," he said, adding that JVs were learning platforms for emerging market companies.