More than a month after calling off a joint venture with Mahindra & Mahindra, Ford Motor has reportedly frozen all projects it was working on with the former as it finalises a new India strategy, Reuters reported citing sources. Ford might even look at working out a new relationship with Mahindra or ending the relationship and related vehicles completely.
Reportedly, Ford was to make a decision in about a month on whether to proceed with Mahindra in a different form or not, adding Ford Chief Executive Jim Farley wants to see a path to greater profitability in India.
On December 31, 2020, the US auto major said it and Mahindra & Mahindra have decided to scrap their previously announced $275 million automotive joint venture and it will continue its independent operations in India as it is. The two companies determined that they will not complete a previously announced automotive joint venture between their respective companies.
Ford entered India 25 years ago, but it has just 3 per cent share in a market dominated by Suzuki Motor Corp's and Hyundai Motor's extensive line-up of mainly low-cost cars.
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The tie-up with Mahindra would have given Ford a better chance against rivals by allowing it to launch new vehicles faster, at reduced costs and with lower investment, company officials and analysts previously said.
The new entity was to develop the market and distribute Ford brand vehicles in India while also selling both - Mahindra and Ford - cars in the high-growth emerging markets. As part of the agreement, M&M was to acquire 51 per cent stake in a wholly-owned arm of the US auto major—Ardour Automotive Private Ltd, presently a wholly-owned subsidiary of Ford Motor Company Inc, USA for around Rs 657 crore. The balance 49 per cent equity shareholding in Ardour was to be held by FMC and/or any of its affiliates.
The halting of the joint venture was driven by fundamental changes in global economic and business conditions caused, in part, by the pandemic over the past 15 months. Those changes influenced separate decisions by Ford and Mahindra to reassess their respective capital allocation priorities, it added.
