Mahindra & Ford announce joint venture

Mahindra & Ford announce joint venture

Mahindra & Ford announce joint venture

M&M said it is committed to fund in the aggregate, for acquiring 51 percent stake and for the future operations of the company, an amount not exceeding Rs 1,400 crore - which includes the likely investment of about Rs 657 crores for 51 percent in the JV.

Mahindra and Mahindra Limited and Ford Motor Company have joined hands to develop, market and distribute the Ford brand vehicles in India.

The new entity, which will be operationally managed by Mahindra, will develop and sell Ford brand vehicles in India and export Ford and Mahindra brand vehicles to emerging markets.

Ford's two vehicle manufacturing plants - one in Chennai in southern India and the other in Sanand in western India, which was inaugurated in 2015 - will be moved to the new joint venture, the companies said. Ford's engine plant at Sanand, Global Business Service unit, Ford Credit and Ford Smart Mobility will remain under the control of the American brand.

Mahindra & Mahindra has made a decision to purchase 51 percent of long-time ally Ford's India business.

M&M will look to achieve an global scale through this partnership, additional capacity through Ford's manufacturing plants in India and economies of scale in EV production.

Mahindra will bring its sourcing, supply chain and Indian market knowledge to the table and will in return get access to Ford's global reach and technology.

Mahindra is the largest producer of utility vehicles in India.

Both Mahindra and Ford will continue to own their respective brands and operate their own independent dealer networks in India. This Ford C-SUV will be powered by Mahindra's next-generation, BS6-compliant, 2.2-litre diesel engine.

Ford confirmed the joint venture will release three new utility vehicles under the Ford brand, including a new midsize utility vehicle that utilizes a Mahindra architecture and powertrains. The joint venture is expected to be up and running by mid 2020. Ford and Mahindra will also collaborate to develop electric vehicles across the emerging markets.

Ford will continue building vehicles in India for the local as well as global market, he added. "At its core, the partnership will be driven by the shared values of both companies, which are focused on caring for our customers, associates and our communities".

The combined market share of M&M and Ford will touch 14 per cent and the JV is expected to be EBITDA (earnings before interest, taxes, depreciation and amortization) positive from the first year. Known internally as the B-SUV, the joint venture will either use the SsangYong Tivoli (Mahindra's S201) or Ford's own Vitara Brezza rival (codename: B763), that is now being developed.

By shifting to a joint venture, Ford is changing its India strategy where it has long run an independent operation in a market dominated by Asian vehicle makers like Suzuki Motor Corp and Hyundai Motor Co and where several others have struggled to make money.

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