[Mahindra will own 51 percent of the joint venture, which will take control of Ford’s assembly plant near the city of Chennai and another in Sanand, the two companies said. The joint venture is valued at $275 million.]
By
Neal E. Boudette
 |
|
Assembly-line workers at
a Ford factory near Chennai, India, in 2012. Ford has
had difficulty making inroads in the Indian market
after years of trying.
Credit Kuni
Takahashi/Bloomberg
|
Ford Motor announced Tuesday that it would
put most of its operations in India into a joint venture to be headed by the
Indian vehicle maker Mahindra & Mahindra, a bid to stanch Ford’s losses
there.
Mahindra will own 51 percent of the joint
venture, which will take control of Ford’s assembly plant near the city of
Chennai and another in Sanand, the two companies said. The joint venture is
valued at $275 million.
Subject to regulatory approval, the venture
could be in operation by the middle of next year, the companies said. They said
the venture would be responsible for strengthening the Ford brand in India and
exporting Ford products made there.
The move is the latest effort by Ford’s chief
executive, Jim Hackett, to cut losses and streamline the automaker. In Europe,
Ford is closing five plants and eliminating 12,000 jobs. It is also cutting
7,000 positions from its global salaried work force, about 10 percent of the
total.
Earlier this year, Ford joined forces with
Volkswagen to develop self-driving cars. Ford and Volkswagen are also working
together to produce commercial vehicles in Europe and pickup trucks for foreign
markets. Ford has been working with Mahindra to develop a sport utility vehicle
for emerging markets.
Mr. Hackett was hired in 2017 to reinvigorate
Ford, but so far his efforts have had little impact on the bottom line. In the
second quarter, Ford reported net income of $148 million, down from $1 billion
in the year-ago period. On Monday, Ford stock closed at $9.16. When he was
appointed C.E.O., the stock was trading above $11 a share.
The joint venture with Mahindra signals a
major shift in Ford’s strategy in India, an emerging market where it was once
expected to see rapid growth. In the past decade, Ford closed its plants in
Australia and invested heavily in India, expanding the Chennai plant and
building a second factory in Sanand, in western India. It also tried to develop
a car to be priced at about $10,000 for India and other emerging markets like
Brazil.
The company imports the EcoSport, a small
S.U.V., into the United States from its Chennai plant.
But the Indian auto market has not grown as
many experts had expected. About four million passenger cars were sold in India
in 2018, well below the 28 million sold in China.
Ford and Mahindra said their joint venture
was expected to introduce three utility vehicles under the Ford brand,
including a midsize S.U.V. built on a Mahindra platform. The companies also
said they would collaborate on developing electric vehicles.
The two companies will maintain their own
branded distribution networks in India. But Mahindra will make use of Ford
dealers to extend its reach in emerging markets. Ford will retain an engine
plant in Sanand.
General Motors stopped selling cars in India
in 2017. This year, Indian auto sales have slumped and automakers have cut
production and laid off thousands of workers.
