The American multinational automaker, ford recently agreed to move almost every asset in India into a joint deal with a local partner. The decision was made after struggling in the Indian market for almost 2 decades in the world’s fourth-largest auto market. The deal ended Ford’s independent operations in the country.
After Ford’s struggle against cheap as well as fuel-efficient vehicles built by the local units of Suzuki Motor Corp. and Hyundai Motor Co, decided to take an $800 million to $900 million related to the value of its India assets as an impairment charge. Mahindra & Mahindra Ltd, the Indian maker of sport utility vehicles, will own 51% of the joint venture as for the remaining share; it will be given to the remaining two companies, Suzuki and Hyundai. These assets include Ford’s two car factories in India and will be managed by Mahindra & Mahindra Ltd.
The Future of Ford in India
The deal includes manufacturing of electric cars in the future, at a time when market for fuel cars and SUVs are going to get worst. Vehicle demand is decided by a slowing economy, dwindling rural income, and rising popularity of ride-hailing and car-sharing services. Ford and Mahindra already have agreed to announce 3 new vehicles under the brand name of Ford. This will start with introducing a midsize SUV. The deal they made will keep ford in the country while at the same time divide their financial burden with Mahindra. Jim Hackett, the Chief Executive Officer, Ford will lead a $11 billion restructuring effort as a part of the deal.
Priya Ranjan, an analyst at Antique Stock Broking in Mumbai stated that, Ford has been “struggling for a long while,” and Mahindra’s products as well as its sourcing and distribution network will support the American company. “It is not about giving up on India, it’s about doing better in India,” she added.
Picture Courtesy” Financial Times
