Ford is creating a new joint venture deal with Mahindra & Mahindra, according to a Reuters report. The joint venture deal will mark an end to the independent business operation of Ford in India stated the report, citing sources.
The deal struck between the companies will let Ford form a new unit on Indian soil and hold 49% stake in the venture. Mahindra will own 51% of the stake. The former’s existing Indian automotive business will be transferred to the new unit including assets and employees.
“It’s like a partial exit (for Ford from India),” the sources cited in the report. The deal is expected to end within 90 days.
The sources also said that the deal can make Ford cars more affordable to the Indian population. This is because the current loyalty that is being paid by the Indian subsidiary to Ford will be eliminated.
India has a growing automobile market. Last fiscal year local automobile giant Maruti Suzuki held 51% of the market share in India and sold more than 1.7 million cars. Ford sold close to 93000 cars much lower than its business rival.
This joint venture deal will allow the U.S. automaker to tighten its grip over the Indian car market and increase the sales of the Ford cars by making it more affordable.
“The companies will continue to work together to develop avenues of strategic cooperation that help us achieve commercial, manufacturing and business efficiencies,” said Ford, according to the report.
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