The renewed alliance of Ford Motor and Mahindra & Mahindra makes sense for a host of reasons.
The car market that is soon to be the world's third-biggest is almost impregnable to new entrants thanks to the power of Maruti Suzuki India Ltd. and, to a lesser extent, Hyundai Motor. Within the past four months alone, two of the world's largest car companies, Volkswagen and General Motors, decided the competition was too tough and backed away from India.
There are, however, two weak points in Maruti Suzuki's formidable armour: 4x4s, and electric vehicles. On both fronts, Mahindra is a natural ally.
It is the country's original builder of all-terrain vehicles. Mahindra has been making Jeeps since 1945, decades before the brand's current association with the Chrysler-owner Fiat Chrysler Automobiles. Its Thar 4x43 is a Jeep in all but name, and the TUV300 has a distinctly Jeepish look about it. In utility vehicles, it is traditionally had a market share approaching 50 per cent.
In electric cars, being pushed by the government with sales taxes 31 percentage points below those on conventional vehicles and hybrids, it has also been a pioneer since its 2010 acquisition of Reva Electric Car.
Those positions are now under threat. Maruti's Vitara Brezza urban 4x4 has taken a devastating swipe at Mahindra's dominance in utility vehicles since its introduction 18 months ago, becoming the fourth-best selling car in the country. So far this year, Maruti's utility vehicles have out-sold Mahindra's, an almost inconceivable state of affairs a few years back.
With Fiat Chrysler also now selling its own made-in-India Jeeps and Hyundai targeting the local market with its Creta 4x4, Mahindra badly needs to revamp a product range that is in danger of looking staid in comparison.
Electric cars are in a similar quandary. For all Mahindra's efforts, it managed to sell just 7,000 or so EVs over the past seven years, an even more dismal performance than the derided Tata Motors' Nano microcar. While it has been pinning hopes of turning that situation around on electric buses and trucks, favourable tax rates aimed at decarbonising road transport are encouraging its rivals. Hyundai, for one, is reported to be considering all-electric versions of its Ioniq hatchback and Kona 4x4 for the Indian market.
What does Ford bring to this contest? Its EcoSport is probably the best mass-market challenger to the Vitara Brezza in India's small 4x4 market, and although it is a relatively minor player in the EV space to date, it has had almost six years of practice making the electric version of its Focus hatchback. More importantly, its research and development budget, at US$7.3 billion last year, is equivalent to more than two decades of Mahindra's expenditure on that front.
These sorts of tie-ups do not always work. Volkswagen pulled back from its mooted alliance with Tata Motors in August, five months after announcing the agreement, and a previous Ford-Mahindra partnership was unwound in 2005 after an uninspiring decade.
Still, as Toyota's attempts to sidle up to Maruti Suzuki via Suzuki Motor and the VW-Tata failure demonstrated, rich-country automotive know-how plus Indian marketing and distribution could be a potent combination. Ford and Mahindra will be stronger together than apart.