NEW DELHI: American carmaker Ford Motor Co and India’s Mahindra & Mahindra (M&M) have decided to end their automotive joint venture, citing changes in the global economic and business conditions, partly caused by the coronavirus pandemic. The action followed the running out of the December 31 “longstop”, or expiration, date of the agreement they had signed in October 2019.
“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,” M&M said in a regulatory filing. It added that this decision would not have any impact on its product plan and that it would continue to focus on SUVs, including electric ones.Ford, on the other hand, insisted that it will continue to maintain its solo operations in India, unlike General Motors, which had wrapped up operations in 2017.
“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.
The now scrapped agreement was signed to explore a strategic alliance covering areas like product development, electric vehicles and distribution in India and emerging markets. Mahindra was to acquire Ford’s business in India, with Ford holding 49 per cent in a joint venture.
M&M Managing Director and CEO Pawan Goenka said, “In the changed scenario, the investments would have been significantly higher than what was there when the DA was signed. Therefore, it just did not make business sense for either partner to go ahead.” Separately, M&M said it is in discussions with a potential investor to sell its majority stake in South Korean arm SsangYong Motor Company (SYMC) which has filed for bankruptcy.