US automaker Ford and India’s Mahindra and Mahindra have decided not to move ahead with their proposed joint venture (JV) citing the drastically changed financial landscape.
Announced in October 2019, the Duo had entered into an agreement to form a JV before 31st December 2020 to utilize the resulting economies of scale and expertise to drive down developmental and production costs of vehicles for emerging markets.
In their independent statements to the media, both firms cited changes in the global economy over the last 15 months as the primary reason to reassess their funding priorities and subsequently allowing the agreement to lapse and not to extend it post its validity date.
Commenting on the nature of the market, Ford spokesman T.R. Reid observed that “The global economy and business environment are not the same as October last year.”
When asked about the 3 new utility vehicles both firms had proposed to launch as part of the JV, Mr. Ried commented that “At this point, there’s nothing to talk about other than the joint venture isn’t going to happen.”
Ford is expected to continue its independent operations in India.
With pressures mounting on them to make investments to compete with electric and self-driving vehicle manufacturers, automakers have been pursuing mergers or alliances to share the cost of research and development (R&D) of these new technologies.
France’s Peugeot S.A (PSA) and Italian-American Fiat Chrysler Automobiles NV expect to close their $38 billion merger in early 2021.
In its statement to the media, Mahindra & Mahindra stated that the recent development will not have any impact on its plan while it continues to accelerate its efforts to develop electric SUVs.