Ford Mahindra JV Mumbai/IBNS: Auto giants Mahindra and Mahindra and Ford have decided to call off their joint venture that started off nearly two years ago, citing global economic and business conditions caused in part by the global pandemic.
The decision was communicated to Bombay Stock Exchange by Mahindra and in a late night message : "The Company and Ford have mutually and amicably determined that they will not pursue their Joint Venture plan."
In its statement Ford said: Ford Motor Company and Mahindra & Mahindra have mutually and amicably determined they will not complete a previously announced automotive joint venture between their respective companies. The decision follows the passing of the December 31 “longstop,” or expiration, date of a definitive agreement the organizations entered into in October 2019."
According to the previous plan, Mahindra was to buy Ford's business in India and the American automobile company would have held 49 per cent in the joint venture.
Reports said the companies did not issue a joint statement on their decision.
Ford has said it would continue its solo operations in India while evaluating its business worldwide to make profits with minimum inputs "to achieve an 8% company adjusted EBIT margin and generate consistently strong adjusted free cash flow."
Mahindra said in its filing that the changes triggered by Covid-19 "influenced separate decisions by the Company and Ford to assess their respective capital allocation priorities.”
The Indian automobile multinational said the discontinuation of the JV will not impact its product plan in any way.
“It is well positioned in its core true SUV DNA and product with a strong focus on financial performance. In addition, the Company is accelerating its efforts to establish leadership in Electric SUVs," it added.
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