Ford Motors India may soon pack its bag from India in a planned ‘partial exit’. According to Reuters, the company will come together with Mahindra and Mahindra in a joint venture. Moreover, the report suggests that Mahindra will have a majority stake of 51% in the JV while Ford will have a 49% share in the JV. Therefore, the company might not fully exit India like GM-owned Chevrolet did back in 2017. However, Ford will cease to exist as an independent manufacturer and will continue as a part of the JV with Mahindra.
The US-based manufacturer is among the oldest and most well known automotive brand in the world. The company has had a presence in India for about 25 years now, starting way back in 1995. It is interesting to note that Ford first entered India in a JV with none other than Mahindra itself, which then the manufacturer ended and set up itself independently as Ford India Private Limited.
The Escort and the Ikon were among its first car models here. However, Ford never could capture the Indian market as it hoped to do. Apart from a few successful models like the Ikon, Fiesta (older gen), EcoSport and the Endeavour, other Ford cars did not catch the fancy of the Indian buyers much. Till date, the manufacturer has invested around $2 billion in India but till date only has around 3% of the market share.
As of now, the total worth of the JV has not yet been disclosed. Both Ford and Mahindra are working towards closing the deal, which is expected to be sealed in around 90 days from now. As for Ford’s assets and employees, the company will transfer them to the JV and hence things will mostly be the same for the workers, apart from the shift of boffins.
To let you know, the news of Mahindra and Ford coming together for a JV is not new and was announced in 2018 itself. However, at that time the plan was to focus on developing and sharing power trains as well jointly develop connected car solutions. In 2020, Mahindra will provide Ford with a new low-displacement BS-VI compliant petrol engine which the company will use to strengthen its model lineup.
Talking about the current status of Ford in India, in FY 2019, the company sold 92,937 vehicles in India which is much less than the industry leader Maruti Suzuki and even other manufacturers like Tata, Mahindra among others. Compared to FY 2018, Ford had a growth of around 3% as it sold 2875 more vehicles in FY 2019. However, that is a negligible increase and with new players like MG Motors, Kia and the recently announced Citroen entering India in the coming time, things could take a more challenging turn for Ford.
Coming to the new JV with Mahindra, it will benefit Ford as it could use the widespread dealership network of Mahindra along with price its products more strategically. India is among the top growing automotive markets in the world and therefore fully exiting the market after investing so much may not be the best option for the company. A partial exit in the form of a JV is among the best options and it will be interesting to see how things turn up for both Mahindra and Ford in the coming time, especially now that there are many new entrants ready to invade the market.