When Mahindra & Mahindra recently announced that it was buying out partner Navistar’s stake in the truck alliance, sections of industry sniggered. In their eyes, it was yet another joint venture that had gone wrong for M&M, after Ford and Renault. Things were not quite working for the Indian SUV maker, they added.
It is a view that raises the hackles of Pawan Goenka, President of M&M’s Automotive and Farm Equipment Sectors. “The definition of ‘not working’ has to be clear. If both partners walk away happily and say they have achieved what they had to, it is fine,” he maintains.
‘No JV is permanent’
As Goenka reiterates, it is good to get into a JV with each partner’s objectives clearly defined, followed by a content parting of ways after the goals are achieved. “No JV is permanent and ‘not working’ means the partners walked away unhappy or short-changed. This is not the case with any of our alliances,” he says.
According to him, Ford and M&M are the ‘best of friends’ today, which is also true for Renault, while it is no different with Navistar either. Had the M&M-Ford alliance continued, say observers, it could have well imposed a whole lot of constraints on the partners, especially with competing vehicles in the SUV space. This would have helped neither M&M, which has grown from strength to strength since the Scorpio, nor Ford, that is gearing up to launch the EcoSport.
Experts believe this predicament could have been as real for Renault, which has achieved a remarkable turnaround in India, thanks to the success of the Duster SUV. Whether this product could have been conceived in an M&M alliance is a moot point. It would have clearly been part of the non-competition clause and affected both companies eventually.
M&M says it learnt a great deal in plant and processes from the Renault JV, which finally led to the Verito (the rechristened Logan) landing up in its portfolio. The alliance was only for a single product which, by itself, was a clear indication that it had a limited life.
Learning process
“Renault learnt what it had to do about India. Though talks did take place for future products in a larger relationship, we opted for independent growth as the best way forward. There is absolutely no bitterness between the two of us,” Goenka says.
Today, the former partners are exploring the possibility of joint sourcing for the Duster and Verito since they are on the same (Logan) platform and share parts. This could even lead to buying parts and developing them jointly in India.
As for Navistar, Goenka says the American truck-maker had to prioritise its global activities, which meant that the pragmatic option was to exit India. At the end of the day, it was clear that Navistar could not afford further investments in this fiercely competitive truck market.