Ford and Mahindra call off planned joint venture

Ford Motor Company and Mahindra & Mahindra have ended their discussions for a joint venture. In a statement issued in the closing hours of the last day of 2020, the two automakers have mutually and amicably determined that “they will not complete a previously announced automotive joint venture between their respective companies.”

The decision follows the passing of the December 31 “longstop,” or expiration, date of a definitive agreement the organizations entered into in October 2019.

On October 1, 2019, Mahindra & Mahindra and Ford Motor Company had signed an agreement in Mumbai to create a joint venture that will develop, market and distribute Ford brand vehicles in India, and Ford brand and Mahindra brand vehicles in high-growth emerging markets worldwide. The JV was to see Mahindra having the 51 percent controlling stake and Ford owning a 49 percent stake. Ford was to transfer its India operations to the JV, including its personnel and assembly plants in Chennai and Sanand. Ford was to retain the Ford engine plant operations in Sanand as well as the Global Business Services unit, Ford Credit and Ford Smart Mobility.

The JV was planned to be the next step in the strategic alliance forged between Ford and Mahindra in September 2017. It was aimed at growing the Ford brand in India and exporting its products to Ford entities globally. While Ford-branded vehicles were to be distributed through the Ford India dealer network, Mahindra would operate its own independent dealer network in India. There were to be planned synergies in product portfolio, sourcing and manufacturing

What Ford brings to the JV table is its technology capability, maturity in product development, global sourcing global market reach and knowhow. Mahindra & Mahindra's strengths are an emerging market business model, integrated PD infrastructure in India; strong India sourcing and India market knowhow.

Global business conditions contribute to calling off of JV
The latest development to call off the JV, according to the companies, “was driven by fundamental changes in global economic and business conditions – caused, in part, by the global pandemic – over the past 15 months.  Those changes influenced separate decisions by Ford and Mahindra to reassess their respective capital allocation priorities.”

Ford says its independent operations in India will continue as is. Ford is “actively evaluating its businesses around the world, including in India, making choices and allocating capital in ways that advance Ford’s plan to achieve an 8% company adjusted EBIT margin and generate consistently strong adjusted free cash flow.

Ford’s plan calls for developing and delivering high-quality, high-value, connected vehicles – increasingly electric vehicles – and services that are affordable to an even broader range of customers and profitable for Ford.  The company is moving quickly to

-  Turn around its automotive business – competing like a challenger while simplifying and modernising all aspects of the company, and

- Grow by capitalizing on existing strengths, disrupting the conventional automotive business, and partnering with others to gain expertise and efficiency.