The companies said in separate statements that the decision was driven by changes in the global economy over the past 15 months, prompting both to re-evaluate their capital allocation priorities.
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Ford Motor Co said on Thursday it would cancel its automotive joint venture with India’s Mahindra and Mahindra Ltd due to the challenges caused by the COVID-19 pandemic. The companies said in separate statements that the decision was driven by changes in the global economy over the past 15 months, prompting both to reassess their capital allocation priorities. “The global economy and the business environment is not the same as it was in October last year,” Ford spokesman TR Reid said.
The deadline for finalizing a joint venture between the companies was December 31, and the two made the decision to terminate the deal rather than close a deal or extend the schedule to do so, Reid said. In October 2019, Ford and Mahindra said they would form a joint venture in India in a move to lower vehicle development and production costs for emerging markets.
In October 2019, Ford and Mahindra said they would form a joint venture in India in a move to cut costs.
The companies said at the time they hoped to launch three new utility vehicles, starting with a midsize SUV, and also jointly develop electric vehicles for emerging markets. When asked if those vehicles were now canceled, Reid said: “At this point, there is nothing to do. Talking about anything other than the joint venture is not going to happen.” Ford said its independent operations in India will continue. The pressure to seek mergers or alliances in the auto industry has mounted as the costs of developing electric and autonomous vehicles lead companies to conserve funds for such efforts.
France’s PSA and Fiat Chrysler Automobiles NV expect to close their $ 38 billion merger in the first quarter of 2021. Ford executives have repeatedly touted a company strategy that includes partnerships, including with Mahindra, as a way to increase sales. efficiency and lower costs on your way to achieving a global operating profit margin of 8%
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Reid said the strategy would continue, when asked if Ford would seek to partner with another automaker in Southeast Asia. Mahindra said in its statement that the decision will have no impact on its product plan and that it is accelerating efforts to develop electric SUVs.
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