Mahindra & Mahindra and Ford Motor Company have signed a definitive agreement to create a joint venture in India valued at $275 million (Rs 1,925 crore). The entity will develop, market and distribute Ford-branded vehicles in India, the two companies said on Tuesday.
In the joint venture (JV), Mahindra will own 51 per cent controlling stake while Ford will hold a 49 per cent shares in the new entity. The JV will be operationally managed by Mahindra, and its governance will be equally composed of representatives from Mahindra and Ford.
Under the deal, Ford will transfer its India operations to the joint venture, including its personnel and assembly plants in Chennai and Sanand. The American automaker will retain the Ford engine plant operations in Sanand as well as the Global Business Services unit, Ford Credit and Ford Smart Mobility.
"The joint venture is the next step in the strategic alliance forged between Ford and Mahindra in September 2017 and is expected to be operational by mid-2020, subject to regulatory approvals," M&M said in a filing to the Bombay Stock Exchange.
The JV will be responsible for growing the Ford brand in India and exporting its products to Ford entities globally. Ford will continue to own the Ford brand, and its branded vehicles will be distributed through the current Ford India dealer network. Mahindra will continue to own the Mahindra brand and operate its own independent dealer network in India.
"Mahindra and Ford coming together is a testament to the long history of cooperation and mutual respect between the two companies. Our combined strengths - Mahindra's expertise in value-focused engineering and its successful operating model, and Ford's technical expertise, global reach and access to future technology - are a potent recipe for success. 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," said Anand Mahindra, Chairman, Mahindra Group.
Commenting on the development, Bill Ford, executive chairman, Ford Motor Company said, "Ford and Mahindra have a long history of working together, and we are proud to partner with them to grow the Ford brand in India. We remain deeply committed to our employees, dealers and suppliers, and this new era of collaboration will allow us to deliver more vehicles to consumers in this important market."
The entity is expected to introduce three new utility vehicles under the Ford brand, beginning with a new midsize sports utility vehicle that will have a common Mahindra product platform and powertrain.
Another area of focus for the joint venture will be electric vehicles. Ford and Mahindra will collaborate to develop vehicles to support the growth of sustainable mobility across emerging markets.
The joint venture will use the Ford brand distribution network in emerging markets to extend support for export of Mahindra products, in addition to Ford-branded vehicles. Exports today form about 7 percent of Mahindra's auto business revenues and its products are exported to South Africa, Nepal, Bangladesh, Sri Lanka and Chile, among other nations and areas.
Edited by Chitranjan Kumar