The deal would make Ford the latest automaker to pare back its interests in India.
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 told Reuters.
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 per cent in India, one of the world's
fastest-growing car markets.
Under
the terms of the deal being negotiated,
Ford Motor will form a new unit in India in which it will hold a
49 per cent stake, while Mahindra will own 51 per cent, 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.
Ford
said it does not comment on speculation, but added both companies
continue to work together "to develop avenues of strategic
cooperation that help us achieve commercial, manufacturing and
business efficiencies".
Mahindra
too said it does not comment on speculation. It said in a statement
it was "working together in identified areas" with Ford
after a 2017 partnership arrangement, and "will announce further
definitive agreements as we progress on some of the other areas."
Currently,
Ford manufactures and sells its cars in India through its
wholly-owned subsidiary. In 2017, it formed a strategic alliance with
Mahindra under which, among other things, they will build new cars
together, including sport-utility vehicles and electric variants.
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