Ford Motor is reversing plans to cede most of its Indian operations to Mahindra & Mahindra due to the challenges caused by the COVID-19 pandemic.
Ford will continue its standalone business in the country after deciding to pull out of a proposed joint venture that would be majority-controlled by Mahindra, a leading Indian manufacturer of SUVs.
The companies agreed to terminate the venture after reassessing in part due to the global coronavirus pandemic, they said Thursday.
The companies said the decision was driven by changes in the global economy over the last 15 months, causing both to reassess their capital allocation priorities.
"The global economy and business environment are not the same as October last year," Ford spokesman T.R. Reid said.
The deadline to finalize a joint venture between the companies was Dec. 31, and both made the decision to end the agreement rather than close a deal or extend the timetable to do so, Reid said.
Under the agreement Ford was expected to fold its local operations, including two factories, into the joint venture. Ford had valued the alliance at $275 million when it was announced in 2019.
Mahindra ranked sixth in sales in India through October, according to data from LMC Automotive, with a total of 102,485 sales, a 46 percent decline from 2019. Ford ranked 10th, with 40,164 sales in the period, a decline of 38 percent. Passenger vehicle sales were down 17 percent overall, LMC said, as the country recovered from a strict coronavirus lockdown in April that led to zero new car sales for the month.
Jim Farley, who became Ford CEO in October, said in 2019 that the JV with Mahindra could allow Ford to double its revenue from India. Ford executives have promoted a strategy that includes partnerships, including with Mahindra, as a way to increase efficiencies and reduce costs on its path to achieve 8 percent global operating profit margins.