Ford Motor Company announced earlier this month that they are taking steps to aid in their emerging market share in India by teaming up with the India automobile company Mahindra & Mahindra. Ford’s reasoning behind this joint venture is to reduce the risks that the company faces for their business in India, as well as cutting the operational costs associated with developing their vehicles in the emerging market. It is a $275 million venture that the two companies will partner together for, with the prime goal of manufacturing and selling vehicles in India and other emerging markets.
Previously, Ford Motor Co has run an independent operation in India with its own production facility in the country. Some time ago, the country was enticing to outside vendors for its promise of financial growth and development. Many motor companies took to India, where auto sales have since been declining. This new venture between Ford and Mahindra is in line with Ford’s new restructuring plan that hopes to save the franchise billions in costs over the following years.
The vision of Ford in joining this partnership is to ultimately save the company overhead and capital for other ventures or scenarios it may face. After months of negotiation, it has been settled that Ford will receive a 49% stake in the new entity of the two companies’ partnership. Once the new operations take place, predicted some time a mid next year, the U.S. conglomerate will transfer all local employees and manufacturing assets to the new company – to be managed by Mahindra.
If all goes as anticipated, the new entity will find success from various contributions by both parent companies. Ford offers extensive technology and a global recognition as a brand. All the while, Mahindra will provide sourcing in India, supply chain and operational management, and a more India-centric knowledge platform of the surrounding markets.
This partnership is the result of a previously formed alliance between the companies back in 2017 when Ford and Mahindra declared a plan to develop cars together. Being a U.S. based company, Ford only owns about 3% of the market share of motor corporations. The market, predominantly owned by Asian motor giants like Suzuki and Hyundai, is advancing in a direction more focused on electric vehicles. Ford and Mahindra intend to release three new SUVs along with developmental plans for electronic vehicles in the upcoming years together.