Ford India may transfer most of its assets to planned JV with Mahindra

Bloomberg September 25 | Updated on September 25, 2019

The JV will not cover Ford’s global business services unit and engine plant   -  REUTERS

Mahindra may own 51% of new entity: Sources

Ford Motor Co is set to transfer most of its assets in India to a joint venture with Mahindra & Mahindra Ltd after failing to make meaningful inroads for more than two decades in the world’s fourth-largest automobile market, people with knowledge of the matter said.

Mahindra, one of India’s largest automakers, will own 51 per cent of the new entity, said the people, who asked not to be identified. Ford will get equal voting rights and board representation, one of the people said. The venture, to be announced as soon as next week, does not include Ford’s global business services division or an export-focused engine plant in Sanand.

Ford’s compensation is likely to be far below the $2 billion it has poured into India, only to achieve a market share of less than 3 per cent. The deal keeps Ford in the heavily populated market while letting it share the financial burden with Mahindra. Ford Chief Executive Officer Jim Hackett is leading an $11 billion restructuring, and paring money-losing overseas operations.

Ford is insulating itself a little bit, said Deepesh Rathore, an independent automobile analyst based in Bengaluru. For Mahindra, it makes sense, because it is increasingly looking at the urban market.

Car plants part of the deal

As envisioned, the new entity will hold most of Ford’s assets in India, including the two car plants it owns in the country.

Ford was one of the first automobile companies to enter India when it liberalised the economy in the early 1990s. Ford first entered India in 1926 but shut down that operation in the 1950s.

A final agreement has not been reached and the discussions could still fall apart, the people said. Mahindra shares fell as much as 4.3% to ₹535 at the BSE on Wednesday.

Published on September 25, 2019

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