Ford and Mahindra clinch their joint venture in India

Ford ties up with Mahindra in India to cut risks and costs

Ford (NYSE:F) formally announces a new joint venture with Mahindra (OTCPK:MAHDY) to make and sell Ford brand vehicles in India, as well as Ford brand and Mahindra brand vehicles in other high-growth emerging markets around the world.

Ford Motor Co. said it will transfer most of its operations in India to Mahindra & Mahindra part of a joint venture with the Indian auto maker, the latest example of auto makers pooling resources and reducing exposure to challenging markets.

Homegrown auto major Mahindra & Mahindra (M&M) on Tuesday announced the acquisition of majority stake in wholly-owned arm of Ford Motor Co (FMC) that will take over the automotive business of the United States auto major in India. "@FordIndia" The company also shared a video of Anand Mahindra, Chaiman of Mahindra Group explaining about the joint venture. The deal is expected to close by mid-2020, the companies said.

A good chunk of Ford's local operations will be passed under the control of the new joint venture, including its personnel and assembly plants in Chennai and Sanand.

However, Ford will retain its engine plant operations in Sanand as well as the global business services units, Ford Credit and Ford Smart Mobility.

By shifting to a joint venture, Ford is changing its India strategy, where it has long run an independent operation in a market dominated by Asian auto makers like Suzuki and Hyundai and where several others have struggled to make money.

The JV will be responsible for growing the Ford brand in India and exporting its products to Ford entities globally. Ford badged cars will continue to be sold in India, and the automaker will also export a big chunk of production to markets overseas.

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The Mahindra-Ford JV expects to introduce three new utility vehicles under Ford brand, beginning with new mid-sized SUV.

By shelving efforts to go it alone in emerging markets, including India, Ford will save capital for more urgent and potentially profitable endeavours - such as defending its US truck franchise or fixing its operations in China. Mahindra will continue to own the Mahindra brand and operate its own independent dealer network in India.

The coming years will see a focus on utility vehicles as well as electric mobility where the strengths of both partners will be leveraged for the India and overseas markets. Despite entering the country more than two decades ago, Ford has struggled to challenge Japanese and South Korean automakers in India.

In India, Ford now manufactures and sells its cars via its wholly owned subsidiary. "We are going to be looking at common platforms across Mahindra, Ford and Ssangyong and this could be a potential game changer", said Mahindra.

Mahindra is the largest producer of utility vehicles in India. "By combining our respective talents, we will offer more vehicles to more customers in more places than ever before and deliver profitable growth to both Ford and Mahindra", said Jim Farley, president of Ford New Businesses, Technology & Strategy.

Citing an instance of scale, Mahindra said the combined sourcing scale of the new entity would be 1.3 times M&M's current scale and three times that of Ford.

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