Team-BHP (https://www.team-bhp.com/forum/)

-   The Indian Car Scene (https://www.team-bhp.com/forum/indian-car-scene/)

-   -   Ford to end independent operations in India; will hold 49% in JV with Mahindra (https://www.team-bhp.com/forum/indian-car-scene/208344-ford-end-independent-operations-india-will-hold-49-jv-mahindra.html)

Ford India could cease independent operations in the country with the new Mahindra deal. JV with Mahindra having 51 per cent stake and Ford with 49 per cent stake expected to be announced in the next 90 days.

Read

Mahindra Ford joint venture in India.

How does this affect the current Ford car owners?
I have recently booked an Aspire and have completed almost all the buying process. I will be taking the delivery within a week's time. Post reading the article, I'm a little apprehensive now :confused:

They are providing 5 years warranty on the Aspire. What happens to the present customers of Ford India?

Am not sure of this - Ford India operations had a profitable year in the year that closed recently, for the first time ever. Why'd they think about closing down operations?

If at all they close down, all spares & service need to be made available for the current owners for the next 15 years as a rule, so nothing to worry for the current owners.

From what i understand, they will just cease independent operations unlike GM that did a complete exit. Which means, you will still get Ford cars but they will be sold by Mahindra / new JV entity. Ford had a profitable year because of their exports and not domestic sales.

Ford will handover its India sales / aftersales to Mahindra / new JV entity and rest everything will remain the same. You will obviously see platform / drivetrain sharing as part of the JV but both car logos will still exist.

Ford is likely to cease operations in India as an independent Company.

Ford may enter a joint venture with M&M ending a 25-year old solo ride that cost $2 billion.

Link

Article in today's TOI
Ford may end its solo drive in India

Source: TOI Mumbai

Mod Note: Moving Ford posts to a new thread. Thanks for sharing!

We've known this'll be happening since a while, but it's still a bit tough to digest. From Ford USA's POV, they've spent 20 years in India and an overwhelming majority of those have been loss-making years. If they made a profit, it was only because of exports. Their sales & market-share in India are tiny, for a brand that is a Top 5 worldwide. Clearly, Ford headquarters wants to preserve its resources & management bandwidth for markets where it has a stronger standing or greater potential (USA, China etc.). The company is taking tough decisions - remember their recent announcement where they'll stop selling sedans in the USA (not one I personally agree with - link to post).

Mahindra having 51% is noteworthy. That means, Mahindra will effectively be the one in control of the JV. And they'll now get access to Ford India's assets. Make no mistake, they'll be taking over. This is a BIG win for Mahindra. I think the 49% gives Ford a wait & watch approach. 5 - 10 years later, if it's still not interested in India, it can simply sell off its stake & exit India completely.

The changing emission & safety norms are going to make things more challenging in the market. And Ford would've been concerned with the entry of aggressive heavily-funded players like Kia & MG who will create a hyper-competitive scenario. Ford's USA HQ obviously didn't see any growth potential in this situation, at least in the short & mid-term. They didn't want to invest more money here either.

Still, this is better than a full exit like GM. It allows Ford to still maintain partial presence in the country ("foot in the door"), with Mahindra doing the hard work, and freeing up Ford USA's bandwidth. So, in the future when the Indian market experiences huge growth and / or Ford wants to increase its presence here, it can do so easily (not the case with General Motors which is now a bad name in India).

Also good news for Ford customers who will continue to receive support from the new JV. They aren't left in the lurch like Chevrolet owners.

GM is gone, VW has handed things over to Skoda, the Fiat brand is RIP and now Ford is exiting its independent business...I predict more will come (e.g. Nissan). This market isn't for weaklings. Am frankly surprised Peugeot-Citroen is thinking of entering.

EDIT on 11th April. Ford India shares the following via email:

Basically after 25 years of entering the market, Ford is back to where it all began.

Their innings started in 1995 as a 50-50 venture with Mahindra to manufacture the Escort, went solo later on, and now starting their withdrawal from the market once again with Mahindra, this time with a humble 49-51 partnership.

Ikon 1.6, Mondeo, Fiesta S and the likes will surely be missed. The new JV with Mahindra will more likely focus only on SUVs - with the next generation Ecosport and XUV 5OO equivalent borrowing heavily from the Mahindra cousins.

Exactly, my thoughts.

Surprisingly, this is called as strategy in corporate terms. Long term vision must have got lost in some corner for short-term (flat) growth (pun intended).

Ford Escort was ticking all the right boxes with better customer satisfaction in those times. Mahindra didn't gain much out of that JV unlike their later JV with Renault. Hope Mahindra makes most of this JV & create better product portfolio with their other acquisitions like SsangYong, Pininfarina.

Very, very disappointing from Ford. The Indian market does have its challenges: being one of the very few RHD geographies, an overwhelming market leader (with 50% share) and silly regulations (sub-4m rule). However, none of these are unsurmountable, case in point Hyundai. Ford should have persisted: they have the products, a better execution and a bold business strategy has been the need of the hour/years.

With Ford not pursuing sedans, they have very little play room in India. They have a cluttered playing field in the sub-4m SUV space and a behemoth to stand up against in the Fortuner segment. The writing has been on the wall for some time.

Such developments, that eventually embolden the majority player, do not bode well for the market.

I hope that this is not a phased exit from India.
From the JV it looks quite evident that M&M will benefit in terms of service etc. M&M sales will not be affected.
After the JV, there are changes that the sales may go down further as it all depends how M&M advertise the Ford products. What if sales do down further, what next ?

While that may be the prima facie conclusion that one draws from a 51-49 joint venture arrangement, there are several other considerations, most importantly the content of the joint venture agreement itself, which will really determine the true contours of the relationship. Typically, a minority stakeholder (especially one that has so much riding on the success of this JV) will seek and provide for various different kinds of minority protection clauses in the JV agreement (including veto rights at the Board and shareholder levels etc). However, yes, the fact remains that Ford is the minority shareholder and Mahindra is likely to have the upper hand where management decisions regarding the future of the JV is concerned.

I am quite disheartened to see this decision, which I have been personally hoping against. Ford has been launching some very competent products in the recent past, and it might just have gained some traction if it held on for a little while longer as an independently managed company in India. Perhaps the synergies of the JV that they speak of will help them gain that traction better. Just hope that this is not the start of their exit from the Indian market.

Have to disagree. Mahindra is everything because of that JV. :)

Let me quote the man himself, Anand Mahindra on this -

I just got myself an Ecosport. This news is making me worried. What if it goes the Fiat way? Hopefully it is not a phased exit.

Ford make some of the best cars on the planet. There is nothing that Mahindra can teach Ford about cars other than how to make their cars worse, lower the already lowered driving pleasure and add more cost cutting. Net result - cheaper but worse cars.

All that junk in the press release that lowered royalty to parent company would help operations is just that - junk.

The current "strategic move" will move this unit from the frying pan into the fire.

History will remember GM, VW and Ford as having something in common - good cars and bad management.