New Delhi: US-based auto major Ford Motor Co and India's Mahindra & Mahindra (M&M) on Friday said they have decided to scrap a previously announced automotive joint venture, citing changes in global economic and business conditions partly due to the Coronavirus pandemic.
While Ford said it will continue its independent operations in India as it is, M&M said the decision will not have any impact on its product plan but will enable it to focus on the core business of SUVs and also develop electric vehicles.
The two companies determined they will not complete a previously announced automotive joint venture between their respective companies. The decision follows the passing of the December 31, 2020, 'longstop', or expiration, date of a definitive agreement the organisations entered into in October 2019, Ford Motor Company said in a statement.
The outcome was driven by fundamental changes in global economic and business conditions caused, in part, by the global pandemic over the past 15 months. Those changes influenced separate decisions by Ford and Mahindra to re-assess their respective capital allocation priorities, it added.
Ford further said its independent operations in India will continue as it is.
"The company is actively evaluating its businesses around the world, including in India, making choices and allocating capital in ways that advance Ford's plan to achieve an 8 per cent company adjusted EBIT margin and generate consistently strong adjusted free cash flow," Ford Motor Co said. EBIT stands for earnings before interest and tax.
Ford's plan calls for developing and delivering high-quality, high-value, connected vehicles increasingly electric vehicles and services that are affordable to an even broader range of customers and profitable for Ford, it added.
Also, it is planning to "grow by capitalising on existing strengths, disrupting the conventional automotive business, and partnering with others to gain expertise and efficiency".
Addressing a video conference, M&M Managing Director and CEO Pawan Goenka said both the companies were clear that given the current situation, this is "the most prudent decision for them to make and move on" and focus on the core business.
"This particular JV clearly got impacted by the significant upheaval that has happened in the whole world because of the pandemic," he said.With agency inputs