In yet another disappointment for the US car industry, heavyweight Ford’s India operation may soon come to the point of a planned ‘partial exit’, so claims a report on the internet. With this new development, Ford may soon walk the way of General Motors as the latter exited India in 2017. However, the customers need not worry as unlike General Motors, one of the oldest carmakers of the world will not leave India completely. Rather, the US maker will partner with Mahindra and Mahindra in a joint venture. The aforementioned report also stated that this new joint venture will see the Indian maker Mahindra hold a majority stake of 51% while the US maker Ford will be the smaller partner with a stake of 49%. This gives hopes that the company will not leave India altogether but the US maker will no longer be an independent maker if the deal comes through.
Ford has had a long association with India as it entered the Indian market in 1995. What is interesting though is that when first entering India, the US maker had initially partnered with Mahindra itself, but later Ford went its own separate way. With over 24 years in the Indian market as of now, and a $2 billion investment in India, Ford Motors India will surely exercise all kinds of caution before making any decision on its operations in India.
Ford was never that successful in the Indian market as it hoped, and only some of its models such as Ikon, Fiesta, EcoSport and the Endeavour have faced success in their segments. Take the case of Ford Figo, which undercuts Maruti Swift in the mid-size hatchback segment and has on-par features and better performance than the latter but still lags behind in sales. As we have already mentioned Ford has already invested nearly $2 billion in India but its market share is only around 3% and perhaps this shows that all efforts by Ford India have not been able to bear the fruit of its liking.
Earlier, it was known that Ford and Mahindra will partner to increase the reach of the US maker in smaller cities. Under this arrangement, Ford would use Mahindra’s large network of showrooms to sell its cars in the smaller cities and suburban markets. Mahindra will also provide Ford with smaller BS-VI engines from 2020. However, this joint venture news is something new. The details on the same are eagerly awaited by the entire auto sector of India. If the deal goes through, the US maker could shift its assets and workers to the new joint venture and only the top and mid management would see a shuffle under the new JV regime.
Ford currently lags behind a lot of makers in the market as far as sales are concerned and they have been nothing to write home about. It will be interesting to see how the market shapes up once the deal between Ford and Mahindra goes through, if it goes through at all!