Ford pulls out of plan to cede India operations to Mahindra

Ford Motors is pulling out of its plans to cede most of its operations in India to the automobile arm of the Mahindra Group, withdrawing from a proposed joint-venture to continue its standalone business in the country. 

The two firms decided to end the proposed partnership after a reassessment in light of the global outbreak of the COVID-19 pandemic, they announced on Thursday, Bloomberg reported.  The two companies had, over a year ago, reached a deal under which Ford was slated to cede its operations to form a joint-venture with Mahindra having the majority stake. 

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Having struggled to get a foothold in the world’s fourth-largest auto market for more than two decades, the future of Ford’s business in India is unclear. “The company is actively evaluating its businesses around the world, including in India,” a statement from Ford read.

The Deaborn, Michigan-based auto manufacturer took a $799 million impairment charge in 2019 ahead of its anticipated asset-transfer to Mahindra to account for “fair value less cost to sell”. The termination of the deal will not affect its valuation, a spokesperson said on Thursday. 

“There will be no impact on the impairment that we recorded previously,” spokesperson T R Reid said. 

The companies had earlier said they will co-operate on the development of an electric car for emerging markets and will also introduce three new models to be sold under the brand Ford in India, including a mid-size SUV. 

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Ford did not confirm what will happen to those projects although, Mahindra said that the venture’s termination will not affect those plans. 

“Mahindra is accelerating its efforts to establish leadership in electric SUVs,” it said in a statement. 

The decision was confirmed ahead of a December 31 deadline for the proposed partnership. Jim Farley, who became Ford’s CEO in October, had said in 2019 that the proposed partnership will help the firm double its revenue from India.