Ford Motors To Reportedly Exit The Indian Market, Will Only Be Part Of JV With Mahindra

Several auto giants, after thriving for decades in the Indian market, are looking for alternate ways to operate in the country rather than being an individual entity. Ford Motor Co now seems to follow suit as a recent report reveals that the American auto maker might be nearing a deal with Mahindra & Mahindra to form a new joint-venture company in India

The decision comes as an aftermath of more than $2 billion in investment put in by Ford in India during its two decades of tenure in the country¡¯s auto market. The firm has consistently struggled for sales, currently being stuck with a market share of just 3 percent.

The new report suggests that the partnership will see Ford operating under a new name in India, with a 49 percent stake in the joint venture, while Mahindra will own the rest 51 percent. Most of the business assets and employees of Ford will be transferred to the new joint venture.

The partnership between the two firms is not new, as Ford and Mahindra had formed a strategic alliance under which the plan was to build new cars together, including sport-utility vehicles and electric variants. Both companies have nodded to the questions of working together in various areas but refuse to comment on the impending joint venture.

Representative Image: Reuters

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As per the Reuters report, the deal is expected to finalise within 90 days, though the value of the transaction has not been defined yet.

Ford has been restructuring its business on the global front in an attempt to save $11 billion in the next few years. Only last month, the company¡¯s joint venture in Russia had announced that it would shut down two assembly plants and an engine factory in the country, so as to exit its passenger vehicle market.

Ford be looking for two key positives from the JV. First, as a JV lead by an Indian firm, it will look to avoid paying any royalty to the global parent company, which might result in more affordable Ford cars and thus, an increased demand. Secondly, the company will seek to pay off its accumulated losses over the years through this deal.

A somewhat similar fate was met by General Motors Co in India in 2017, as the company downsized its operations and stopped selling its cars in India altogether. The instances are a stark reminder of the tough competition in the Indian market faced by the auto makers, which is majorly dominated by Maruti Suzuki due to its pan India retail and after-sales services and ample offerings in the affordable vehicles category.