Ford Motor Co. F -3.15% is taking steps to solidify its partnership with Indian auto maker Mahindra & Mahindra Ltd. EQM&M -0.05% by jointly developing several new models, an attempt at lowering costs in an important emerging market that has long been a challenge for many car makers.
The Dearborn, Mich., based car maker said Thursday it would develop new SUVs and a small electric car through the partnership and sell them in India and other emerging markets where demand is high for low-cost cars that return only slim margins.
The move is part of a broader strategy under Chief Executive Jim Hackett to cut costs by using partnerships to help defray the hefty expense of engineering and building new models.
Ford has distance itself from its crosstown rival General Motors Co. in recent years by deepening its investment in emerging markets that GM has exited. Last year, GM said it would stop selling vehicles in India and redirect investment in more lucrative markets.
Analysts have pointed to Ford’s challenges in India as a drag on earnings and have pressed for more details about how the company plans to respond.
A once-promising market, India has lately become a drain on resources for many car makers. While new-car demand continues to grow, the country is overcrowded with competitors trying to sell cheap cars. Ford executives say they still see long-term potential in India, the world’s fifth largest car market by sales.
Mahindra is well known in the country, but it has struggled to establish itself and its lineup of rugged SUVs in more mature markets.