Ford and Mahindra cancel car joint venture

(Reuters) -Ford Motor Co said on Thursday it was canceling its auto joint venture with India Mahindra and Mahindra Ltd due to challenges caused by the COVID-19 pandemic. (ford.to/2X2V6Gg)

The companies said in separate statements that the move was driven by changes in the global economy over the past 15 months, which caused them to reassess their priorities for allocating capital.

“The global economy and business environment are not the same as in October last year,” Ford spokesman TR Reid said.

The deadline to finalize a joint venture between the companies was Dec.31, and the two made the decision to end the deal rather than close a deal or extend the timeline to do so, Reid said.

In October 2019, Ford and Mahindra announced that they would form a joint venture in India to reduce the costs of developing and producing vehicles for emerging markets. The companies said at the time that they planned to launch three new utility vehicles, starting with a mid-size SUV, and jointly develop electric vehicles for emerging markets.

When asked if these vehicles are now canceled, Reid said, “At this point there is nothing to say other than the joint venture is not going to happen.” Ford said its independent operations in India will continue.

The pressure to pursue mergers or alliances in the auto industry has increased as the costs of developing electric and autonomous vehicles push companies to save funds for these efforts. France’s PSA and Fiat Chrysler Automobiles NV plan to complete their $ 38 billion merger in the first quarter of 2021.

Ford executives have repeatedly touted a corporate strategy that includes partnerships, including with Mahindra, as a way to increase efficiency and reduce costs on its way to reach 8% of profit margins. global operations. Reid said this strategy would continue when asked if Ford would look to partner with another automaker in Southeast Asia.

Mahindra said in her statement that the decision will have no impact on its product plan and that it is accelerating its efforts to develop electric SUVs.