Ford is likely to terminate India’s independent business new contract with Mahindra.
Key sentence:
- After re-evaluating in part because of the global coronavirus pandemic, the companies decided to terminate the company.
- A spokesperson said the valuation would not be impacted by the termination of the transaction on Thursday.
- Earlier, the automakers said they would partner to create an electric car for growing markets as well as work together to launch three new models.
- The decision came as a deadline of Dec. 31 to formalize the proposed relationship loomed.
Ford Motor Co. is changing plans to cede to Mahindra & Mahindra Ltd. most of its Indian activities, opting to withdraw from a planned joint venture (JV) and continue the country’s standalone business.
The companies to terminate the venture:
After re-evaluating in part because of the global coronavirus pandemic, the companies decided to terminate the company, they said Thursday.
The decision ends an agreement reached more than a year earlier in which Ford was supposed to fold its local operations into a JV that would have been majority-controlled by Mahindra, India’s Leading sport utility vehicle manufacturer, including manufacturing plants.
Ford in his statement:
Since it has struggled for even more than two decades to expand in the world’s fourth-largest automotive sector, the future of Ford’s company in India is uncertain. “The company actively assesses its companies around the globe, as well as in India,” Ford said that in a statement.
As T.R. Reid stated:
In preparation for the asset transfer to Mahindra, the U.S. car manufacturer took a $799 million impairment charge in 2019 to account because of what it called “fair value less cost to sell.” A spokesperson said the valuation would not be impacted by the termination of the transaction on Thursday.”There will be no effect on the impairment we have previously recorded,” said T.R. Reid, a spokesperson.
Mahindra is accelerating its efforts to establish leadership in electric SUVs,” it stated.
Earlier, the automakers said they would partner to create an electric car for growing markets as well as work together to launch three new models, beginning with a mid-size SUV, to be sold through the Ford brand in India.
What would become of those ventures was not mentioned by Ford. Mahindra said that the termination of the venture would not impact its product plans in its own statement. “Mahindra’s attempts to develop leadership in electric SUVs are accelerating,” it added.
Mahindra could allow Ford to double its revenue from India Jim Farley stated:
The decision came as a deadline of Dec. 31 to formalize the proposed relationship loomed. In 2019, Jim Farley, who became the chief executive officer of the US automaker in October, said that the JV with Mahindra might allow Ford to increase its revenue in India.
