Soon, Mahindra and Mahindra will purchase a majority stake in the Indian subsidiary of Ford Motor Co, which will, in turn, lead to the formation of a JV
It looks like Mahindra and Mahindra, the Indian UV giant, will be soon able to buy a majority stake in Ford India. We say this as Competition Commission has given its final nod to the homegrown carmaker’s plans of acquiring a controlling stake in the fully-owned subsidiary of the Ford Motor Co. With this, a new joint venture between the two carmakers will be floated.
This development comes at the back of a decision that was taken last year, wherein Mahindra and Mahindra announced its plans of buying a 51 per cent stake in the local subsidiary of the American car giant for a total sum of Rs 657 crore. The Competition Commission has now approved the “formation of JV between Mahindra & Mahindra and Ford Motor and transfer of the automotive business of Ford India to the JV”.
With the formation of the Joint Venture, the automotive business of Ford India Pvt Ltd (FIPL), a wholly-owned subsidiary of Ford Motor Co. that includes the company’s manufacturing plants of in Chennai and Sanand will be transferred to the JV.
The JV will be managed by Mahindra and Mahindra but its governing body will be equally composed of representatives of both the company. The JV will be responsible for the development, marketing and distribution of Ford cars in the country.
While its manufacturing plants will be transferred to the new body, the engine plant operations in Sanand as well as the Global Business Services unit, Ford Credit and Ford Smart Mobility will be retained by the manufacturer.
Also, Ford Motor Company will continue to be the owner of the Ford brand and its vehicles will be sold through the current chain of dealerships that the company enjoys. On the other hand, Mahindra will continue to operate its vehicle division independently, However, the JV will be responsible for the growth of the Ford brand in India and export markets that the company’s Indian subsidiary currently caters to.