NEW DELHI: In a sudden and surprising move at the close of 2020, American auto maker Ford and homegrown Mahindra and Mahindra decided to call off their automotive joint venture, blaming the decision on “global economic and business conditions caused, in part, by the global pandemic”.
Ford insisted that it will continue to maintain its solo operations in India.
There was no joint statement by the companies as both of them issued separate press releases regarding the surprising announcement.
The statement by Ford said that the decision was driven by fundamental changes in global economic and business conditions. Issued from Ford’s headquarters at Dearborn in Michigan, the statement said the companies have “mutually and amicably” arrived on the decision.
“Ford Motor Company and Mahindra & Mahindra have mutually and amicably determined they will not complete a previously announced automotive joint venture between their respective companies. The decision follows the passing of the December 31 “longstop,” or expiration, date of a definitive agreement the organizations entered into in October 2019,” the Ford statement said.
As per the now-defunct plans, Mahindra was to acquire Ford’s business in India, and the American auto company would have held 49% in the new joint venture. The companies were to produce new platforms, cars and SUVs — including electric vehicles — together.
In a late-night message to the Bombay Stock Exchange (early January 1), Mahindra and Mahindra said, “The Company and Ford have mutually and amicably determined that they will not further pursue their Joint Venture plan.”
Mahindra also said that the outcome was driven by the “fundamental changes in global economic and business conditions caused, in part, by the global pandemic” since the agreement was first announced. “These changes influenced separate decisions by the Company and Ford to reassess their respective capital allocation priorities.”
Ford said it 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.”
M&M said the 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.”