The decision to end the joint venture with Ford was not an easy one to make, but given the changed business environment — mostly triggered by the Covid-19 pandemic — Mahindra & Mahindra has decided to focus on its core business of SUVs, said Pawan Goenka, the company’s MD and CEO. It has also led the company to revisit its capital allocation, he said.
M&M had entered into a joint venture with Michigan-based Ford back in October 2019, under which both companies were to jointly build vehicles. On Thursday, both the companies announced that they have mutually and amicably decided to not go ahead with the JV.
“Clearly, both Mahindra and Ford have worked on this JV for over two years. It was not an easy decision, but both companies were clear that given the current situation, this is the most prudent decision to make —(to) move on with our businesses and focus on the core business that we are focussing on,” said Goenka, talking to reporters on Friday. He identified SUVs as the core focus area for the company, along with electric vehicles.
We really believe that our source of competitive advantage is in the core SUV business, said Rajesh Jejurikar, Executive Director- Automotive & Farm Equipment Sector, M&M. “Our brand reflects that and we really have the heritage to win around that positioning and that strategy,” he said, while drawing attention to the success of M&M’s recently launched Thar, which has garnered over 6,500 bookings in December.
“Due to the pandemic, every auto company is relooking where we put our money, and we will have to double down on electric vehicles, and therefore it’s a fairly different business today than what it was a year ago. The auto business has gone through a steep change, not just because of the pandemic, but also because of the shifting priorities of where the businesses are, and therefore one has to take such hard calls,” Goenka explained.