American carmaker Ford, the eighth largest player in domestic car market, will use its partner M&M's retail network strength to reach out to more consumers in smaller cities and towns that are not serviced by the brand. Ford is likely to offer mini small format sales service outlets to M&M dealers to expand its reach.
Ford is said to be getting ready to open at least 25 small format sales service outlets with Mahindra dealers in markets where it does not have a presence. These will require smaller investments due to a smaller size, less number of service bays and lower manpower requirements, etc, said a person familiar with the talks. M&M, in response to queries, said it is too early to comment on this.
Ford said the contours are being worked upon and there is no clarity now. "Of the many areas that we will work on, one relates to distribution within India (of Ford products) and outside India (of M&M products). At this point of time the discussion is really about how do we leverage each other's network. There are strengths on both sides. It is too early to say how this will pan out, teams are having discussions and scope is getting defined," said Anurag Mehrotra, managing director at Ford India.
M&M, the third largest passenger vehicle (cars, vans and utility vehicles) player in the domestic market, has a nationwide network strength of a thousand touch points for sales/service while the count for Ford is 465, primarily in metros, tier I and II cities. Setting up elaborate retail sales and service outlet for cars is cost intensive as the investment for a dealer could run into a few crore Rupees. Even if dealers are ready to invest it becomes impossible for them to get returns and such outlets go out of business eventually. Car makers are experimenting with newer cost-effective formats for dealerships.
Speaking anonymously, a dealer for M&M said a lot of thought will go into this distribution arrangement so that Ford is able to get benefit out of M&M's strength. "There is also a possibility that Ford cars might be displayed inside M&M's showrooms. Multiple formats could be there," he said. Ford has a low single digit market share of 2.6 per cent in the world's fifth largest car market.
Besides distribution, the two firms would explore joint development of products, especially electric and connected vehicles and sourcing of raw materials/components as a part of the agreement. September's joint announcement said teams from both the firms would work together for up to three years and any further strategic cooperation would be decided at the end of the period.