2020 Ended with Ford and Mahindra calling off their partnership, which was announced back in October 2019. This news came out of nowhere as everyone was expecting the promised offerings from the joint venture. According to both the brands, the joint partnership was canceled because of the COVID-19 pandemic. The pandemic made every individual and every brand to reevaluate their plans further. So it’s no wonder that brands were also forced to change their plains. Here, both brands were forced to quit the partnership to focus on strengthening their current business. And to prevent the losses that may be caused by the pandemic if they continue their partnership.
What was the deal between Ford And Mahindra?
For those who don’t know and for those who want a refresh of what has happened so far, In October of 2019, the Major car brands Mahindra and Ford announced the Business transfer and Subscription agreement. According to this, Mahindra & Mahindra and its subsidiary companies will acquire a 51% share of Ardour Automotive Private Limited. Ardour Automotive is a fully owned subsidiary of Ford Motor Company in India.
After Mahindra’s acquiring, the rest of the 49% shares will continue to be owned by Ford Motors and its affiliates. More details about the partnership stated that the new Joint Ventured company would buy Ford’s automotive assets in India. This will include two of the vehicle manufacturing plants, excluding the engine making plant in Gujrat.
In the Agreement, both the brands were also planning to develop an SUV together while sharing the technology and engines. We know that Both the brands have great goodwill when it comes to their SUV offerings. They were actually focusing on making an actual hardcore SUV since both brands have unparalleled knowledge and experience in manufacturing best in class SUV.
All these reasons were enough to make the customers and Industry experts welcome this Joint Venture. From this agreement, Ford intended to develop new engines based upon the newly arrived BS6 emission regulations. Since investing in a new big Diesel engine with these new regulations will cause a lot of money for Ford. But, the current sales of SUV’s by Ford wasn’t enough for them to justify this huge investment. Hence, this agreement was created. Mahindra will supply the engines while, in return, they will get the technology for electrification and knowledge of Ford in connected technology.
Even though both brands canceled the deal, Both the brands have confirmed that the SUV, which was happening according to the deal, is still on. This means that we don’t have to drop our excitement and hopes for this upcoming SUV. Mahindra will continue to manufacture for Ford, as the manufacture tie-up is still on. Ford will continue to be an independent brand. But Ford actually needs to do something if they want to continue in the Indian market. Since they are very low in numbers when it comes to the sales for their vehicles, this Join Venture may, in fact, actually have helped Ford to stay in India much longer.
As we have said before, joint ventures are the best solution for the companies since the cost of developing new technologies is not going to coming down. The pandemic hit most brands, but the consumers still want innovations to be offered when purchasing their dream car. Especially when it comes to Ford in India, they really need to look into their strategies to sustain in the most competitive market.