Automobile manufacturers Mahindra & Mahindra and Ford Motor Company have called off their joint venture, the companies announced on Friday. In a statement, Mahindra & Mahindra said they have 'mutually, amicably determined' they will not complete a previously announced automotive joint venture between their companies.
The action follows the passing of the expiration date of a definitive agreement the organisations entered into in October 2019.
“According to the companies, the outcome was driven by fundamental changes in global economic and business conditions – caused, in part, by the global pandemic – since the agreement was first announced. Those changes influenced separate decisions by Ford and Mahindra to reassess their respective capital allocation priorities,” the statement said.
On its part, Mahindra said that this decision will not have any impact on its product plan.
"It (Mahindra) is well positioned in its core true SUV DNA and product platforms with a strong focus on financial performance," the statement said. "In addition, Mahindra is accelerating its efforts to establish leadership in electric SUVs."
In its statement, Ford Motor Company said its operations in India will continue as is.
“The company is actively evaluating its businesses around the world, including in India, making choices and allocating capital in ways that advance Ford's plan to achieve an 8% company adjusted EBIT margin and generate consistently strong adjusted free cash flow,” it said.
Ford said that its plan calls for vehicles — and increasingly electric vehicles — that are affordable to customers and profitable for itself.
The venture between Ford and M&M was valued at $275 million, where M&M would have run Ford’s India operations. The 2019 announcement had said that Ford would hold 49% and M&M 51% in the new entity. The companies had said at the time they would be developing products for emerging markets, including electric cars, which would have been sold under the Ford brand in India. It is unclear what would happen of these plans, but Mahindra said that this announcement does not impact its product plans.
The automakers had said they would cooperate to develop an electric car for emerging markets and work together to introduce three new models to be sold under the Ford brand in India, starting with a midsize SUV.
At the time of its announcement, Ford had said it had committed more than $2 billion to the Indian venture and after the deal, it took a $799 million impairment charge in 2019. Bloomberg quoted a spokesperson stating the valuation doesn’t change despite the deal being terminated.