Ford, Mahindra to scrap proposed joint venture

US auto major Ford Motor Co and India’s Mahindra & Mahindra (M&M) on Friday said they have decided to scrap a previously announced automotive joint venture citing fundamental changes in global economic and business conditions caused, in part, by the coronavirus pandemic.

While Ford said it will continue its independent operations in India as it is, M&M said the decision will not have any impact on the company’s product plan.

The two companies determined they will not complete a previously announced automotive joint venture between their respective companies.

The decision follows the passing of the December 31, 2020 ‘longstop’ or expiration date of a definitive agreement the organisations entered into in October 2019, Ford Motor

Company said in a statement.

The outcome 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, it added.

Ford further said its independent operations in India will continue as is.

‘The company 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 per cent company adjusted EBIT margin and generate consistently strong adjusted free cash flow,’ Ford Motor Co said.

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, it added.

Also, it plans to ‘grow by capitalising on existing strengths, disrupting the conventional automotive business, and partnering with others to gain expertise and efficiency’.

In a regulatory filing, M&M said, ‘this 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. In addition, the Company is accelerating its efforts to establish leadership in electric SUVs.’

In October 2019, the two companies had announced an agreement under which Mahindra & Mahindra would acquire majority stake in a wholly-owned arm of Ford Motor Co (FMC) that will take over the automotive business of the US auto major in India.