Ford-Mahindra Joint Venture Called Off: Ford To Continue Independent Operations In India

Published: Friday, January 1, 2021, 13:55 [IST]

Ford Motor Co. has announced that the automotive joint venture between themselves and Mahindra & Mahindra has been called off. The two companies first announced the joint venture on 1st October 2019, which was called off on the 31st December 2020.

According to both companies, the decision to call off the joint venture was due to the challenges caused by the COVID-19 pandemic. The companies stated that with the changing global economics, both Ford and Mahindra had to reassess their capital allocation priorities.

Ford's statement read,

"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."

The statement also stated that the 31st of December 2020 was the deadline for both companies to enter a definitive agreement. However, looking at the economic changes since October 2019, both companies chose to call off the JV, instead of closing the deal.

As per the announcement in October 2019, the Joint Venture between both companies would have allowed Mahindra to control all of Ford's India operations, including production and sales. The Joint Venture was initially planned by both companies to pool in resources and develop new products and technologies.

Now with the Joint Venture being called off, Ford has confirmed that it will continue independent operations in India.

The American brand stated, "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."

The joint venture was expected to bring in a number of new products in the Indian market, including the next-gen EcoSport and a mid-size SUV. In fact, an image of the mid-size SUV from the Ford-Mahindra JV was leaked online, which quickly went viral. However, with the entire JV being called off, the future of the above-mentioned products now hangs in the balance.

Thoughts On The Ford-Mahindra JV Being Called Off

In a surprise announcement, the joint venture between Ford and Mahindra has been called off. Both companies have stated that the decision to call off the JV was mutual and amicably determined, based on various factors.