Ford Motor Co. is intending to transfer its Indian assets to a joint venture with Mahindra & Mahindra Ltd.
Ford had entered the Indian market with a 50:50 joint venture with Mahindra in 1995. Subsequently, the Detroit-based automaker increased its stake to 72 per cent.
If the new deal goes through, Mahindra will own 51 per cent of the new entity.
Ford will, however, get equal voting rights and board representation, according to media reports. The joint venture will not include Ford’s global business services division or an export-focused engine plant in Sanand, Gujarat.
As per the deal, Ford will get a compensation of something less than the $2 billion it has invested in India. It will also help Ford stay in the game while letting Mahindra share the financial burden.
The auto industry in India is facing a tough time with sales at its lowest in a decade. Even General Motors scrapped a $1 billion investment plan two years ago and stopped selling Chevrolet here.
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