Ford Motor, Mahindra & Mahindra scrap auto joint venture deal
US automaker company Ford Motor and Indian automotive company Mahindra & Mahindra have scrapped their previously announced agreement to create an automotive joint venture.
According to the parties, the decision was made on the basis of fundamental changes in economic and business conditions across the world, which have been partly driven by the prevailing Covid-19 pandemic since the last 15 months.
These changes are said to have influenced separate decisions taken by Ford Motor and Mahindra & Mahindra to relook into their respective capital allocation priorities.
Ford Motor will continue to operate independently in India.
Ford Motor, Mahindra & Mahindra cancel auto joint venture deal. Photo courtesy of The Ford Motor Company.
The US automaker company stated: “Ford said its independent operations in India will continue as is. 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.”
As per the agreement signed in October 2019, the auto joint venture was planned to develop, market, and distribute Ford brand vehicles in India and Ford brand and Mahindra brand vehicles in high-growth emerging markets across the globe.
Ford Motor was to transfer its operations in India to the proposed auto joint venture, which includes its personnel and assembly plants across Chennai and Sanand.
The US automaker company had planned to retain its Ford engine plant operations in Sanand and also the global business services unit, Ford Credit, and Ford Smart Mobility, if the joint venture was to be formed.