Mahindra & Mahindra Ltd. and Ford Motor Company have mutually and amicably decided not to complete a previously announced automotive joint venture between their companies.
“The action followed passing of the December 31, ‘longstop’, or expiration, date of a definitive agreement the organisations entered into in October 2019,” M&M said in a statement.
“According to the companies, the outcome was driven by fundamental changes in global economic and business conditions – caused, in part, by the global pandemic – since the agreement was first announced. Those changes influenced separate decisions by Ford and Mahindra to reassess their respective capital allocation priorities,” the statement added.
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Mahindra said that this decision would not have any impact on its product plan. It was well positioned in its core true SUV DNA and product platforms with a strong focus on financial performance. In addition, Mahindra was accelerating its efforts to establish leadership in electric SUVs, it said.
‘Operations in India will continue’
Ford further said its “independent operations in India will continue”.
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“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% 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 were affordable to an even broader range of customers and profitable for Ford, it added.
The company said it was moving quickly to turn around its automotive business — competing like a challenger while simplifying and modernising all aspects of the company.
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 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. that will take over the automotive business of the U.S. auto major in India.
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% stake in a wholly-owned arm of the U.S. auto major — Ardour Automotive Private Ltd., at present a wholly-owned subsidiary of Ford Motor Company Inc, U.S., for around ₹657 crore. The balance 49% equity shareholding in Ardour was to be held by the FMC and/or any of its affiliates.
The new venture was also envisaged to acquire the automotive business of Ford India Pvt. Ltd. (FIPL), a wholly-owned subsidiary of the FMC, that has been engaged in the automotive business in India since 1995.
The automotive business to be acquired includes vehicle manufacturing plants of Ford India at Chennai and Sanand but excluded the separate powertrain facility in Sanand, which is essentially used for the FMC'’s global markets, and the powertrain division of FIPL also did not form part of the deal.
(With PTI inputs)