Ford, Mahindra to scrap automotive JV
“In the changed scenario, the investments would have been significantly higher than what was there when the DA was signed. Therefore, it just did not make business sense for either partner to go ahead with this JV”
image for illustrative purpose
Decision driven by fundamental changes in global economic and business conditions caused, in part, by the pandemic
New Delhi: US-based auto major Ford Motor Co and India's Mahindra & Mahindra (M&M) on Friday said they have decided to scrap a previously announced automotive joint venture, citing changes in global economic and business conditions partly due to the coronavirus pandemic. While Ford said it will continue its independent operations in India as it is, M&M said the decision will not have any impact on its product plan but will enable it to focus on the core business of SUVs and also develop electric vehicles. The two companies determined they will not complete a previously announced automotive joint venture between their respective companies.
The decision follows the passing of December 31, 2020, expiration date of a definitive agreement the organisations entered into in October 2019, Ford Motor Company said in a statement.
Addressing a video conference, M&M Managing Director and CEO Pawan Goenka said: "In the changed scenario, the investments would have been significantly higher than what was there when the DA was signed. Therefore, it just did not make business sense for either partner to go ahead with this JV."
M&M Deputy Managing Director and Group CFO Anish Shah, "We had talked about investing Rs 1,400 crore of equity into the Ford JV and there would have been another Rs 1,400 crore to Rs 1,500 crore of debt. So, a total of about Rs 3,000 crore would have been invested. Now, what we are looking at today is higher."
Meanwhile, M&M said it is in discussions with a potential investor to sell its majority stake in South Korean arm Ssang Yong Motor Company (SYMC), which has already filed for bankruptcy and expects to sign a non-binding agreement next week. The Mumbai-based auto major, which currently holds nearly 75 per cent in the Korean firm, expects to finalise the deal by February end.
