New Delhi: Ford Motor Co is nearing a deal with Mahindra & Mahindra to form a new joint-venture company in India, a move that will likely see the US automaker cease independent operations in the country, two sources with direct knowledge of the talks said.
The deal would make Ford the latest automaker to pare back its interests in India. At the end of 2017, General Motors Co downsized its Indian operations and stopped selling cars locally, dealing a blow to Prime Minister Narendra Modi’s strategy to encourage domestic manufacturing.
Over two decades, Dearborn, Michigan-based Ford invested more than $2 billion in India but has consistently struggled – it currently has a market share of just 3 percent in India, one of the world’s fastest-growing car markets.
Under the terms of the deal being negotiated, Ford will form a new unit in India in which it will hold a 49% stake, while Mahindra will own 51%, the two sources said.
The US carmaker’s Indian unit will transfer most of its current automotive business to the new entity, including its assets and employees, according to one of the sources.
“It’s like a partial exit (for Ford from India),” the source said.
The deal is expected to close within 90 days, the sources said, adding the value of the transaction was not yet clear. They spoke on condition of anonymity because of the sensitivity of the matter.