Representational image | An employee assembles door plates for Mahindra & Mahindra Ltd. | Photo: Udit Kulshrestha | Bloomberg
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London/Southfield: 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% of the new entity, said the people, who asked not to be identified discussing the confidential plan. Ford will get equal voting rights and board representation, one of the people said. The venture, to be announced as soon as next week, doesn’t 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’s poured into India, only to achieve market share of less than 3%. 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.

Global carmakers have had a tough time making inroads into India, which is dominated by Suzuki Motor Corp.’s cheap, fuel efficient vehicles. General Motors Co. scrapped a $1 billion investment in India two years ago and stopped selling Chevrolet models there. The market as a whole faces challenges, with sales contracting for the past 10 months, forcing the industry to cut production and jobs.

A final agreement hasn’t been reached and the discussions could still fall apart, the people said. Reuters reported some elements of the venture in April.


Also read: Maruti Suzuki to shut down Gurugram and Manesar production plants for 2 days


Latest Foray

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 liberalized the economy in the early 1990s. Ford first entered India in 1926 but shut down that operation in the 1950s.

“Ford remains committed to growing its customer base and product portfolio in the world’s fourth-largest automobile market, and will continue to make in India, for India and the world,” Lori Arpin, a spokeswoman for the Dearborn, Michigan-based automaker, said in a statement while declining to discuss specifics. Mahindra declined to comment.

The deal will allow Mahindra to sell some Ford vehicles in developing markets under its own brand, the people said. Ford and Mahindra also are jointly developing a mid-sized sport-utility vehicle for India.

Back in 2012, Ford had aimed to make the South Asian nation one of its three largest markets by 2020. Most global carmakers have failed to win over buyers in the notoriously price-conscious market led by Suzuki’s local unit, Maruti Suzuki India Ltd., with its strong network of dealers and ubiquitous repair shops. – Bloomberg


Also read: Maruti contradicts Sitharaman’s millennial remark, says cabs not a factor in auto slowdown


 

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11 COMMENTS

  1. It was bound to happened….like nokia… If you do not keep on upgrading you lose competition… Poor designing team…..always late comers in changes….ford must hire Hyundai designers… Also a LOGO needs to be changed from typical BLUE… I DON’T UNDERSTAND How COME such a big organization can not have proper PROACTIVE TEAM who is rapidly involved in designing part…why don’t they learn from Hyundai and honda… Chevrolet had the same issue…. A GOLDEN LOGO WAS ALWAYS A DOWN MARKET…also quality of plastic..

  2. Safety cars will be recognized in India only when the helmats and seats belts are used voluntarily understand the purpose…those who use it for the sake of traffic police will compromise safety and quality against price and economy.,.

  3. chevrolet failed because indian customers rapidly saw that chevy cars are shit and you have to keep repairing, repairing and replacing once its out of warranty.
    Both ford and chevy are a success in the USA only because they have a lock-in and trade-ins of existing customers along with the ability to finance new chevy cars.

  4. Did anyone notice the headline by THE PRINT – *Ford gives up on India…. as if India is to be blamed. Rather the news SHOULD BE- Ford couldn’t make inroads in India like Suzuki and Hyundai. This is called hiding your own frustrations.. Right Mr. Print??? (ThePrint is the most frustrated and biased media I have come across) . I am a proud owner of ford vehicle and love that Car. Hence it comes as a shock that they have decided to exit. I hope I do it regret the decision of buying a Ford car.

  5. Indians believe in the concept of value for money. There is major difference between being cheap and looking for the money’s worth.

  6. Most Indians are cheap. They don’t care about quality. They don’t deserve world class products tbh. RIP Ford India

    • That’s why Mercedes, BMW, Audi, Porsche, Ferrari, Lamborgini, Ducati, Land Rover, etc brands have proliferated in India – because Indians are “cheap”. Indians will pay for quality – not crap.

    • Relsci – Your comment is exactly like your mind- cheap. Indians are smart and they know how to get value for money. We don’t cater to any one with big names like you dumb asses do. But since you are dumb you might not understand what I am saying.

  7. It seems MNCs do not know how to operate in India. They get their MNC CEOs COOs and follow what they do in their country. Possibly the adage that – when in Rome do as the Romans do- might help them. Running a company in still water countries may be easy but in turbulent waters you need a local navigator.. . .

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