According to sources, the American automaker Ford Motor has frozen all projects it was working on with India’s Mahindra & Mahindra while it finalizes a new strategy for the South Asian country.
The reports come just weeks after the two companies called off their planned joint venture. “The options could include working out a new relationship with automaker Mahindra or ending the relationship and related vehicles completely,” one of the sources said.
The two other sources said they expect Ford to make a decision in about a month on whether to proceed with Mahindra in a different form or not, adding Ford Chief Executive Jim Farley wants to see a path to greater profitability in India.
Ford and Mahindra had proposed a joint venture to develop at least three sport-utility vehicles (SUVs) for India and emerging markets, as well as share suppliers, powertrains and technology. The $275 million deal, which would have ended most of Ford’s independent operations in India, was called off on December 31.
Since Mr. Farley became CEO in October, Ford has pushed harder to remake itself globally as part of an $11 billion restructuring, including ending manufacturing in Brazil and speeding up the rollout of electric vehicles. With so much on Mr. Farley’s plate and limited financial resources, India is a lower priority, the first source said.
Ford entered India 25 years ago, but it has just 3 percent share in a market dominated by Suzuki Motor Corp’s and Hyundai Motor’s extensive line-up of mainly low-cost cars. The tie-up with Mahindra would have given Ford a better chance against rivals by allowing it to launch new vehicles faster, at reduced costs and with lower investment, company officials and analysts previously said.
Ford said its independent Indian operations will continue.
For Mahindra it would have been an opportunity to enter new global markets, but it walked away from the deal over concerns its return on investment would be too low. Mahindra said in a statement that the automakers are looking at ways to collaborate. “We have defined a timeline till the end of March for this work to be completed,” the company said.
Rethinking strategy
Ford is weighing all programs it had planned for the joint venture with Mahindra and will review which ones it plans to keep from a profit standpoint, the sources said.
The most crucial of these plans is a mid-sized SUV to be built by Mahindra on its vehicle platform and using its powertrain (which gives the forward movement to a car). Ford planned to launch this in 2022 with a target to sell around 50,000 units annually in India, sources said. Mahindra, too, has asked suppliers to freeze work on this, they said.
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