Ford Motor Co. and Indian automaker Mahindra & Mahindra Ltd. agreed to jointly develop vehicles in India and high-growth emerging markets, Ford announced Oct. 1.
The two automakers signed a definitive agreement to create a joint venture, valued at $275 million, to produce and distribute Ford brand vehicles in India, and both Ford and Mahindra brand vehicles in emerging global markets.
Mahindra will own a 51% controlling stake in the venture, and Ford will own 49%, according to a news release.
Ford will transfer its India operations, including personnel and assembly plants in Chennai and Sanand, to the joint venture. The Michigan-based automaker will keep its engine plant in Sanand, along with its Global Business Services unit, Ford Credit and Ford Smart Mobility.
Ford said in an SEC filing that it expects to incur an impairment charge in the range of $800 million to $900 million related to fixed assets of its India operations. The charge will be reflected in the company's third-quarter earnings.
Mahindra and Ford expect to introduce three new utility vehicles under the Ford brand, starting with a midsize SUV. The automakers will also work on electric vehicles as the industry focuses on electrification.
The venture is expected to be operational by mid-2020, subject to regulatory approvals.
"Strong alliances like this play a crucial role in assuring we continue to achieve our vision while at the same time staying competitive and delivering value to our global stakeholders," Jim Hackett, Ford president and CEO, said.
Exports make up about 7% of Mahindra's auto business revenues, and Ford will offer its brand distribution network to help support that.
"Emerging economies including India are expected to account for one in three future vehicle sales," Pawan Goenka, managing director of Mahindra, said. "The joint venture will have a distinct product portfolio with shared platforms and powertrains, the newest technology, high quality and engineering standards from both Mahindra and Ford, at optimized costs."
Shares of Ford were down 0.76% to $9.09 as of 11:19 a.m. ET on Oct. 1.
