Ford-Mahindra JV: Ford Likely to End Independent India Business

Ford India is reportedly planning an exit from the Indian market as an independent entity, getting into a JV with Mahindra that will let them have a 49% stake in the new business model. However, giving 51% rights to Mahindra will mean restricted governance on their own products and plans. Ford India is currently the seventh largest brand by the sales chart and when their exports are included, they have a huge number on their side to justify the independent existence. However, the domestic sales number is not rising, even after several attempts of launching new, cost-effective and extremely capable products.

The position sounds great but when calculated with market percentage, only an average of 3 cars from Ford are sold when 100 cars are sold throughout the country. Ford India is one of the earliest American brands to enter India, investing over $2 Billion in their 20-year term. Still, the number of cars sold by brands like Maruti and Hyundai have forced other brands to reconsider their strategies. Mahindra and Tata rival each other in the UV market while Honda and Toyota have their own niche buyers. The majority of sales for Toyota comes through the Innova and Fortuner while Ford India has no such product except for the EcoSport.

However, the launch of new products in the compact segment and an increase in price for the EcoSport has pushed them to a lower position. The officials close to the progress revealed that the brand will make a decision soon and the deal seems to close in the next 90 days. They have earlier announced a JV with Mahindra for an SUV for India while this deal will take the operational style of Ford to some other level. The other change for Ford here would be lower prices as Mahindra will help them with cost-effective production and lower the overall cost by cutting the royalty that goes to the parent organization currently.

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