Ford pulls plug on plans to cede India business to Mahindra

The companies agreed to terminate the venture due to the disruptions caused by Covid-19

New Ford Motors cars sit at a storage area in the Port of Cologne in Germany. The manufacturer's operations across the globe have been disrupted by the coronavirus outbreak. Bloomberg

Ford Motor is reversing plans to cede most of its Indian operations to Mahindra & Mahindra, deciding to pull out of a proposed joint venture and continue its standalone business in the country.

The companies agreed to terminate the venture after reassessing in part due to the global coronavirus pandemic, they said.

The decision ends a deal reached more than a year ago under which Ford was expected to fold its local operations, including two factories, into a JV that would be majority-controlled by Mahindra, a leading Indian manufacturer of sport utility vehicles.

The future of Ford’s business in India is unclear as it has struggled for more than two decades to grow in the world’s fourth-largest car market.

“The company is actively evaluating its businesses around the world, including in India,” Ford said a statement.

The US marque took a $799 million impairment charge in 2019 in anticipation of the asset transfer to Mahindra to account for what it called “fair value less cost to sell.” A spokesman said the termination of the deal won’t affect that valuation.

“There will be no impact on the impairment that we recorded previously,” said TR Reid, the spokesman.

The manufacturers said previously they would cooperate to develop an electric car for emerging markets and work together to introduce three new models to be sold under the Ford brand in India, starting with a mid-sized SUV.

Ford did not specify what would become of those projects.

Mahindra said in its own statement the venture’s termination wouldn’t affect its product plans. “Mahindra is accelerating its efforts to establish leadership in electric SUVs,” it said.

The decision came as a December 31 deadline loomed for formalising the planned partnership. Jim Farley, who became the Ford's chief executive in October, earlier said that the JV with Mahindra could allow Ford to double its revenue from India.