The ravages of the Covid-19 pandemic and the tumultuous changes in the auto motive sector caught up with Mahindra & Mahindra, leading it to sever ties with JV partner Ford.

M&M’s CEO and MD Pawan Goenka wants to herald the new year by going back to its core business of SUVs, focussing on the Indian market, and on electric vehicles.

Even as the new year was dawning, M&M and Michigan-based Ford announced the end of the joint venture they had started in October 2019 amid much fanfare.

Business equations have been redefined amid the pandemic, noted Goenka. “Due to the pandemic, every auto company is relooking where we put our money, and we will have to double down on electric vehicles, and therefore it’s a fairly different business today than what it was a year ago. The auto business has gone through a steep change, not just due to the pandemic, but also because of the shifting priorities of where the businesses are, and therefore one has to take such hard calls,” he said.

Ssangyong deal likely soon

This development comes on the heels of M&M’s South Korean subsidiary, Ssangyong Motor Co (SYMC), filing for court receivership after it missed repayment of loans aggregating to ₹408 crore. In a media interaction, Goenka had said that the company is actively scouting for an investor to take a majority stake in SYMC, with the term sheet for the same expected to be signed as early as next week, and the deal to be concluded in two months.

This will reduce Mahindra’s ownership in SYMC to 30 per cent or less. If the deal does not go through, SYMC will be going into court receivership.

Now on, the homegrown M&M’s sights will be set on the domestic market, with a strong focus on SUVs and EVs. “Our focus would be a lot more on EVs as we go forward,” said Anish Shah, Deputy Managing Director and Group CFO, M&M.

Rajesh Jejurikar, Executive Director- Automotive & Farm Equipment Sector, said M&M’s source of competitive advantage is in the core SUV business,. It plans to launch two cars on all new platforms this year, with the XUV500 and the Scorpio also in the pipeline.

In a sense, the decisions around SYMC and Ford are driven by the same narrative — that of how business scenarios have changed due to the pandemic, and hence, leading the company to revert to its core businesses, Goenka reflected.

It’s a fairly different business today than what it was a year ago...therefore one has to take such hard calls

 

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