Ford announced Tuesday that it will restructure its business operations in India by transferring most of its assets into a joint venture led by a rival automaker, Mahindra & Mahindra Ltd.
The Dearborn, Michigan-based automaker has struggled to turn profits in India, the world’s fourth largest automotive market.
“This move gets Ford’s underperforming assets in India off its books, which should help clean up its balance sheet a bit,” one analyst, John McElroy, told the Detroit Free Press, a week before Ford’s announcement.
Under the deal, Ford will own 49% of the new venture while Mahindra will own the rest. Ford’s employees and assembly plants in Chennai and Sanand will be transferred into the venture, which is valued at $275 million.
The companies said in a statement that their venture is subject to regulatory approval and expected to fully roll out by mid-2020. It will build on the alliance that the automakers first established in 2017.
“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,” said Jim Hackett, Ford president and CEO.
The move is part of Ford’s $11 billion global restructuring efforts, which Hackett initiated after assuming the company’s top post in 2017.
Following Ford’s announcement, one of Ford’s Twitter accounts, @FordIndia, began receiving comments from confused customers.
“Ford exiting India?” asked one account called @Rapideffect.
The automaker responded: “Ford is here to stay and committed to bring many more products that our customers in India want and value.”
Since Tuesday, Ford’s stock price has fallen slightly. It went from $8.90, at the end of market trading on Tuesday, to $8.74 on Friday.
Ford did not respond to requests for comment. Mahindra did not respond either.