Ford India’s medium term future has turned into a big question mark following the break up of its JV with Mahindra
We all know that Ford and Mahindra decided to call off their joint venture just before entering the new year. The pandemic induced slowdown and uncertain future prospects were cited as reasons for both the parties reevaluating their partnership.
If not, this JV would have resulted in Ford India handing over most of its production and product development responsibilities to its partner. Following the announcement, the two automakers have been trying to figure out the best possible way to move forward while taking advantage of some synergies.
Ford India reviewing its position
A recent report by Reuters says that Ford India and Mahindra have frozen activities on all of their joint projects including the highly anticipated Ford C-SUV based on next generation Mahindra XUV500’s platform. The companies are working towards finalizing a clear path on their new collaboration strategy by end of March before deciding to resume or permanently discontinue joint projects.
The scope of the original JV included platform, powertrain, supplier and technology sharing. When the breakup was announced, it was believed that the Ford C-SUV project will still go head in addition to Mahindra supplying a new 1.2-liter petrol engine for the EcoSport.
Ford C-SUV facing uncertainty
To be positioned in the lucrative mid-size crossover territory, the Ford C-SUV carries a sales target of 50,000 units in the domestic market including a significant push in the export markets. This project would not only give Ford India a much needed boost in its sales volume but it would also help Mahindra strengthen its economies of scale.
With the Ford SUV originally scheduled to be launched in 2022, the temporary freeze as the companies review their options is likely to lead to a delay in launch. Reuters reports that Mahindra has asked its suppliers to freeze the C-SUV development process for now.
The cancellation of the JV also means Ford India’s proposed product pipeline of three new SUVs in the medium term is currently facing uncertainty. While Ford maintains that it will continue its independent operations in the country, it is being reported that India is on a lower priority in the global scheme of things as the American automaker is undergoing a comprehensive restructuring that would lay emphasis on electric vehicles.
What’s next for Ford India?
If Ford decides to completely severe its connections with Mahindra, it would have its work cut out as far as future product portfolio is concerned. Any other alternative would warrant significant investment which would be a challenge in the current scenario.
The Blue Oval has been in our market for the last 25 years and yet has a meager market share of 3%. The last five year average of Ford India’s capacity utilization stands at 53% despite decent export operations. In short, Ford India needs to take some definitive actions soon to ensure its future sustainability.