Ford Freezes All Projects Developed Under Its Mahindra JV
Mahindra too has asked suppliers to halt work on the second-generation XUV500-based Ford midsize SUV.
As the year 2020 came to a close, the Ford India-Mahindra joint venture (JV) was called off and weeks later, the American carmaker has frozen all the projects it was working on with its former Indian partner.
Currently, Ford is finalising its new strategy for India and has several options to consider, including working out a new relationship with Mahindra, or ending the pact altogether. A decision is expected to be made in about a month.
The Michigan-based firm, which will be independent in India, wants to generate consistently strong cash flow and is reviewing all the programmes from a profit standpoint.
Chief Executive Officer, Ford Motor Company, Jim Farley has devised a $11 billion (about Rs. 80,000 crores) global restructuring plan for the firm and wants to see a path to greater profitability in India.
Currently, Ford only has a 3 percent market share in the country and over a 5-year average, it has only utilised around 53 percent of its manufacturing capacity here. While domestic sales are not that strong, it does export nearly double the number of cars than it sells in the Indian market.
Had it gone through, the $275 million (about Rs. 2000 crores) Ford India-Mahindra JV would have helped both firms develop vehicles faster and at reduced investment.
Under the deal, at least 3 Ford SUVs, including 1 based on the second-generation Mahindra XUV500, were proposed to be developed for India and emerging markets, while powertrains, technology and even suppliers were to be shared.
The American firm is now negotiating new terms with Mahindra for an engine that will power the EcoSport. Two other Ford SUVs that are set to be launched in 2023 and 2024 were also set to be using Mahindra engines.
If nothing works out, Ford must upgrade its current engines or look for another supplier and also formulate a plan to bring its global products to India.
Source – Reuters.com