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After Ending JV Talks With Ford, India’s Mahindra Now Focus On SUVs

After Ending JV Talks With Ford, India’s Mahindra Now Focus On SUVs
After the end of the unsuccessful joint venture talks with the United States auto maker Ford Motor Co, India’s auto giant Mahindra & Mahindra Ltd has now decided to go alone and focus on further development of its core portfolio of sport-utility vehicles (SUVs) and the electric versions of the vehicles, according to reports quoting information from a senior executive of the company.
The main focus for the company will be developing its portfolio of large SUVs for its core India market in the short term and then shift to making electric vehicles in the medium term in its new strategy for its automotive business, said Anish Shah, the deputy managing director of Mahindra.
"We are going back to our core," Shah, who will take over as managing director from April, told the media. "We are going to look ahead at how we can accelerate our investment in electric and really start moving to the new age. We clearly hold the ambition to be a global brand and there again the electric journey is an important one," Shah added.
Shah said that the starting point will be Mahindra's high-end electric vehicle Pininfarina Battista and added that the focus of the company will also be on development of electric platforms in India to build SUVs for the local market as well as for exporting.
Their automotive joint venture was called off earlier in the week by Mahindra and Ford citing the Covid-19 pandemic which has prompted both the companies to rethink and re-strategize their resource and capital allocation priorities.
A plan for joint development of vehicles that would have been manufactured in India for the local market as well as for exporting to dozens of emerging markets under the Ford badge had been drawn up initially by the two companies.
But reports said that Mahindra was not convinced about the high expenditure needed for the joint venture and about the returns from such investments in a post pandemic business environment.
Initially, about 30 billion rupees ($410.68 million) had been planned by Mahindra to invest in the new joint venture, Shah told reporters. He said that after the cancellation of the joint venture. Mahindra now plans to make that investment in development of electric vehicles and added that the company is still open to collaboration with Ford in the near future including in electric vehicles.
This strategic decision is viewed to be part of a larger restructuring plan ay Mahindra under which the company will exit some of its loss making ventures such as its South Korean unit Ssangyong Motor, and instead focus completely on profits and cash flow.
The company is close to striking a deal with an investor for the sale of a majority stake in Ssangyong, Mahindra said. Its South Korean business has been placed in receivership. Shah said that the total investment of Mahindra in the SUV-maker is $264 million and the terms of a deal for the selloff of its stake will determine the extent of the write-off.

Christopher J. Mitchell

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