JVs don't mean walking hand in hand into sunset, forever: Mahindra

Tags: Companies
With a list of courtships with some of the glamorous global automotive brands -- Ford, Renault and Navistar behind, Mahindra Group Chairman and MD Anand Mahindra says such partnerships have shelf life as joint ventures by "nature are creatures of short duration".

"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," Mahindra told PTI in an interview.

M&M had partnered with Ford between October 1995 to March 1998 to make and sell cars. With Renault it had a JV between June 2005 to August 2010 to manufacture and sell the Logan sedan. In the commercial vehicles segment, it had partnered with US firm Navistar between November 2005 to February 2013.

In the defence segment, it had partnered BAE Systems that lasted between 2009 to 2013.

Explaining why the homegrown USD 16.5 billion group has had a history of short JVs, he said: "JVs in the old days, Indians used to think they 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 JV with Ford, Mahindra said it was because the US auto major did not know India then.

"They needed some body to 'escort' them into India. That's why we made the Escort car," he quipped.

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 for emerging market companies, JVs were learning platforms.

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