This comes as a bit of a surprise, that the joint venture (JV) between Mahindra & Mahindra and Ford Motor Company is off the table due to the ongoing pandemic situation. The pandemic has cause businesses all over the world to reevaluate their plans for the times to come. Automobile companies, just like all the other companies, had to make changes to their list of priorities in order to compensate for the losses made during 2020. Therefore, this joint venture had to be called off at this moment. Ford has stated that. it will carry on in India as an independent car manufacturer, like previously.
What was the agreement?
Even though the joint venture may be called off, the joint projects will go on. This means that Mahindra will manufacture products for Ford as a result of its manufacturing tie-up. According to the business transfer and subscription agreement executed by Mahindra and Ford in October 2019, M&M or its subsidiary companies were to acquire 51% of the equity share capital of Ardour Automotive Private Limited, a wholly-owned subsidiary of Ford Motor Company in India. The remaining 49% was to be a part of Ford and/or its affiliates. The automotive assets of Ford were to be bought by the new company. It includes two vehicle manufacturing plants but excludes one engine making plant in Gujarat.
The key points of this agreement were that the companies will develop an SUV together and share the connected technology and engines. Both Mahindra and Ford are very prominent brands when it comes to SUVs. Typically, their DNA comprises of hardcore and pure SUVs. The experience that they have in heavy vehicle manufacturing is unparalleled. Therefore, this agreement made a lot of sense. That is what made the customers as well as industry experts very excited to see what will come out of this cooperation.
The point of contention for Ford in India was to develop new engines after the arrival of BS6 emission regulations. The investment for the new engines, especially the bigger diesel engine would’ve cost a lot to Ford. The sale of heavy SUVs from Ford was n enough to justify the investment. As a result, Mahindra was to supply its new range of engines to Ford and in turn get the technology for electrification as well as connected technology. However, this deal has gone through as per the previous agreement and this SUV will hit our roads in late 2022.
What happens now?
As automobile enthusiasts, we hope that such joint ventures do not get cancelled, because JVs are a good thing for our industry. Two huge carmakers can be benefitted from each other strengths and come out with brilliant products. This has become extremely important because the competition in the rapidly-growing Indian market is intense. Ultimately, the customers will end up getting better products and a wide choice.