- after almost 25 years making cars in india, ford has signed on to a joint venture with india's mahindra that will make ford the minority owner.
- india is just recently enacting emissions and safety requirements for cars, while sales are way down in the country.
- still, ford wants a presence in the populous country, where it has had capacity to build 400,000 passenger cars.
ford is selling its india assembly plants to mahindra and entering a joint venture with the automaker, effectively ending the u.s. brand's independence in india after 24 years.
in september 2017, months after general motors announced it would pull out of india by that year's end, ford sought mahindra to help ford's distribution within the country and co-develop new vehicles for india and emerging markets. by march 2018, the two companies agreed to engineer three new vehicles—a compact suv, a mid-size suv, and an electric vehicle—while sharing powertrains. the final step is a significant handoff to mahindra, which will own 51 percent and manage the entire business once india's authorities approve it next year.
it is likely that mahindra, which has a north american engineering division that employs 425 people in auburn hills and troy, michigan, may become involved with dearborn on product development. the division is the first ever u.s. team to design an india-spec car. when asked what the collaboration would entail, mahindra automotive north america said it would not comment. the division also handles u.s. sales of its off-road willys jeep-based 4x4, the roxor, which is sold only at powersports dealers. mahindra is not planning to enter the u.s. market.
since re-entering india in 1995 after exiting in the 1950s, ford was one of few foreign automakers to set up manufacturing in one of the world's most densely populated countries. it employs 14,000 people across two assembly plants in sanand and chennai (which exports the ecosport to the u.s.), another engine plant in sanand, and more corporate offices in delhi and coimbatore. india's low labor costs, a lack of safety requirements, a growing middle class, and favorable trade agreements with many countries in southeast asia, russia, and africa have been profitable for automakers. gm, despite dismantling its dealerships in india, continues to export from its factory in talegaon. mercedes-benz is exporting glc crossovers to the u.s. from pune, where jaguar land rover (owned by india's tata motors) also has a local plant.
but the india car market is flipping on its head. the government, pressured by safety advocates like euro ncap and the united nations, is mandating the first crash-test standards in the country's history. starting this month, every new car on sale must pass three crash tests (frontal, frontal driver's-side offset, and side) under requirements set by the un, which will force automakers to refresh older models or remove them from sale. cars that are on sale now still aren't up to u.s. or european standards that demand the strictest safety measures. the entry-level ford figo, a car positioned under the fiesta, currently has no stability control, side airbags, or curtain airbags. many automakers, including nissan's datsun brand that operates in india, continue to sell cut-rate cars we would brand as dangerous in an accident—precisely because they haven't been required to make them any safer. india is also enacting tougher emissions standards next year.
the india market is tanking, too. domestic car sales have shrunk for the past 10 months. the 115,957 sales recorded in august were a 41 percent drop year over year, the largest ever, according to bloomberg. more than 580,000 people have lost jobs in the auto sector over the past year and a half. growth and gdp are down.
but that's not stopping ford, which said it will keep ownership of its engine plant, bank, and additional offices supporting its export and mobility businesses. currently, the company has the annual capacity to build up to 610,000 engines and 440,000 cars. mahindra, which employs 240,000 people in 100 countries and also owns pininfarina, has long led the india market in trucks and suvs, even if the offerings haven't been up to u.s. standards.