American auto maker Ford and homegrown Mahindra and Mahindra have ended their discussions for a joint venture that was announced in October 2019.
The companies announced their desire to explore into new opportunities back in late 2017 as Mahindra’s local presence and Ford’s global expertise would be leveraged for benefitting one another.
Ford committed that it will continue to maintain its solo operations in India.
History
In October 2019, M&M and Ford came together for a JV with mutual benefits in mind and to take advantage of each other’s strengths in various field.
The Joint Venture company was said to have 51 per cent controlling stake for Mahindra and the remaining 49 per cent for the American auto major.
Reason for called Off
The decision 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.
Purpose of Joint Venture
The purpose of the proposed joint-venture was to create synergies, share costs and get scale
Deal in Joint Venture
- Mahindra-Ford were to build multiple vehicles together.
- Ford will continue to operate in India as an independent entity
- Ford likely to enter into contract manufacturing arrangement with Mahindra for future products.
Mahindra told in a regulatory filling
“The Company and Ford have mutually and amicably determined that they will not further pursue their Joint Venture plan.”
“The decision will not have any impact on the company’s product plan.”
“It is well positioned in its core true SUV DNA and product platforms with a strong focus on financial performance.”
Comment from Ford
“We are 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.”
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