After the exit of General Motors and Fiat from India, Ford Motor Company has now decided to close its independent operations in the country as it agreed to move most of its assets in India into a joint venture (JV) with Mahindra and Mahindra (M&M), which will own 51% controlling stake and operationally manage the JV.
Both companies have signed a definitive agreement to create a JV that will develop, market and distribute Ford brand vehicles in India, and Ford brand and Mahindra brand vehicles in high-growth emerging markets around the world.
“Ford will transfer its India operations to the joint venture, including its personnel and assembly plants in Chennai and Sanand. Ford will retain the Ford engine plant operations in Sanand as well as the global business services unit, Ford Credit and Ford Smart Mobility,” both companies said in a joint statement. Ford has struggled to compete with cheap, fuel-efficient vehicles in the world’s fourth-largest automobiles market even as it was one of the first global car companies to enter India when the economy opened up in the early 1990s. “Mahindra and Ford coming together is a testament to the long history of cooperation and mutual respect between the two companies,” said Anand Mahindra, chairman, Mahindra Group.
“Our combined strengths — Mahindra’s expertise in value-focussed engineering and its successful operating model, and Ford’s technical expertise, global reach and access to future technology — are a potent recipe for success,” he added.
Valued at ₹1,925 crore
The joint venture, valued at ₹1,925 crore, is the next step in the strategic alliance forged between Ford and Mahindra in September 2017 and is expected to be operational by mid- 2020 and its governance would be equally overseen by representatives of Mahindra and Ford.
“Ford and Mahindra have a long history of working together, and we are proud to partner with them to grow the Ford brand in India,” said Bill Ford, executive chairman, Ford Motor Company.
The joint venture will be responsible for growing the Ford brand in India and exporting its products to Ford entities globally.
The American major will continue to own the Ford brand, and its branded vehicles will be distributed through the current Ford India dealer network.
Mahindra will continue to own the Mahindra brand and operate its own independent dealer network in India.
The joint venture expects to introduce three new utility vehicles under the Ford brand, beginning with a new midsize sports utility vehicle that will have a common Mahindra product platform and powertrain.
“Emerging economies including India are expected to account for one in three future vehicle sales,” said Dr. Pawan Goenka, managing director, Mahindra & Mahindra Limited. “The joint venture will have a distinct product portfolio with shared platforms and powertrains, the newest technology, high quality and engineering standards from both Mahindra and Ford, at optimized costs. This winning combination will enable the joint venture to successfully position its vehicles in India, as well as unlock the potential of other highly competitive emerging markets”.
Another area of focus for the joint venture will be electric vehicles. Ford and Mahindra will collaborate to develop vehicles to support the growth of sustainable mobility across emerging markets.
"Driving greater economies of scale across the automotive value chain including sourcing, product development and access to relevant technologies, the joint venture is expected to achieve enhanced efficiencies to strengthen the Ford brand in India. In addition, the joint venture will be a catalyst for growth for the Ford and Mahindra brands in emerging markets, which are growing at double the rate of the global industry," said the statement.
