Ford transfers India operations to new joint venture with Mahindra
Ford Motor Co. is transferring its operations in India to a new joint venture with Mahindra Group and partnering on several vehicles with the Indian automaker, marking yet another partnership as global automakers seek scale to contain rising costs.
The move would keep Ford involved in India, on pace to become one of the world's largest automotive markets. Ford's vehicles have struggled to gain traction in India, where Mahindra has great success moving its SUVs. The joint venture, in which Mahindra owns a controlling stake, would give Mahindra access to Ford's quality and experience in suspensions, among other things.
Ford's new JV is the latest in a string of partnerships orchestrated by CEO Jim Hackett and his team. They're aiming to cut costs and increase scale as the automotive industry inches into an uncertain and expensive future many believe will be dominated by electric vehicles and other new technology.
"We feel we can create a strong and competitive powerhouse," said Jim Farley, Ford president of new business, technology and strategy. "The creation of our joint venture today places India at the very center of Ford's strategy for emerging markets."
The details announced Tuesday follow those announced in July when Ford executives detailed their partnership with Volkswagen AG on self-driving and electric vehicles. Hackett has said often since taking the helm at Ford that partnerships would be necessary to boost profitability. Ford also plans to partner with Plymouth-based Rivian Automotive LLC on a fully-electric vehicle.
"Strong alliances like this play a crucial role," Hackett said via webcast during a press conference in India. Ford Executive Chairman Bill Ford and Anand Mahindra, chairman of Mahindra Group, echoed Hackett.
"The world that we're entering into is increasingly complex," said Bill Ford. "I don't believe that any one company can do all of this alone, nor should they."
Said Anand Mahindra: "Every large company in the world is looking at partnerships as a strategy."
The automakers expect to close the deal by mid-2020. Ford and Mahindra would have an equal number of members on the joint venture's board, though the new company would be managed by Mahindra. The new joint venture is valued at $275 million.
The joint venture would bring three new Ford-branded utility vehicles to the Indian market, beginning with a midsize SUV the automakers had previously announced. And the automakers also plan to partner on electric vehicles for emerging markets. The joint venture grows manufacturing scale and sourcing scale for both companies, saving the automakers money.
Pawan Goenka, managing director of Mahindra, told The Detroit News previously that Ford could help the Indian automaker expand to new markets outside of India. He said the venture is designed to be profitable by the very first year.
Goenka also said the joint venture does not signal Ford's departure from India: "This is like two old friends deciding that it makes sense to move into a new house together. To pool our talents, and share the benefits."
The automakers have been in partnership discussions since 2017 when Ford and India's leading utility-vehicle manufacturer announced plans to collaborate on mobility programs and electric vehicles, among other things. Last year, the automakers expanded the discussions to look at possible partnerships on platforms and powertrains. Ford's business in India began as a partnership with Mahindra in 1995. The automakers have been discussing SUV partnerships since March 2018.
Goenka told The News in February that Ford was negotiating to use Mahindra's compact SUV platform, or C-platform, for an emerging-markets vehicle. That platform would be developed and manufactured by Mahindra, but Ford and Mahindra would have separate "top hats" for the vehicles. A top hat essentially means the entire body of the vehicle that sits on top of the wheels and engine.
Meantime, the automakers also discussed Mahindra's use of Ford's smaller B-platform for Mahindra products. Those vehicles would be made in a Ford plant in India with a Mahindra "top hat," and sold "side-by-side" with Ford. The B-platform is used primarily for commercial vehicles.