NEW DELHI: In a sudden and surprising move towards the close of 2020, the American automaker Ford and homegrown Mahindra and Mahindra decided to cancel their car joint project, blaming the decision on the “world economy 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 from the companies, as they both issued separate press releases regarding the surprising announcement.
Ford’s statement said the decision was prompted by fundamental changes in global economic and business conditions. Issued from Ford’s Dearborn headquarters in Michigan, the statement said the companies have “mutually and amicably” reached the decision.
“Ford Motor Company and Mahindra & Mahindra have mutually and amicably determined that they will not complete a previously announced automotive joint venture between their respective companies. The decision follows the December 31 approval of a “prolonged shutdown” or expiration date of a definitive agreement that the organizations entered into in October 2019, ”said Ford’s statement.
Under the now-defunct plans, Mahindra was to acquire Ford’s business in India, and the American auto company would have had 49% in the new joint venture. The companies were to produce new platforms, cars and SUVs, including electric vehicles, together.
In an overnight 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 go ahead with their Joint Venture plan.”
Mahindra also said the result was driven by “fundamental changes in global economic and trade conditions caused, in part, by the global pandemic” since the deal 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 India, making decisions and allocating capital in a manner that advances Ford’s plan to achieve a company adjusted EBIT margin of 8% and generate free cash flow. set consistently strong. ”
M&M said the decision “will have no impact” on the company’s product plan. “It is well positioned in its 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.
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