Forward Industries, Inc (NASDAQ:FORD) is moving into a joint venture partnership with the Indian automaker Mahindra. This is a move that will have the company move some of its operations into the country. Mahindra hasn’t been performing quite well for over quite some time in the country. The profit margins have been pretty slim. Market observers say that might have promoted it to give in to the latest deal easily.
Ford and what it stands to gain
Ford understands what is in the deal for it. First and foremost, it gets to remain in India, where it has been conduction its business operations for over two decades. It also knows the huge growth potential of India. Thirdly, it won’t have to take up the full cost burden of making its new models since it will be a partnership.
An official working with Ford reveals that the joint venture will manufacture vehicles for the two businesses in India. Asides from that, It will serve as the export hub to Europe, North America, and other regions.
Ford also wants to take advantage of Mahindra’s Indian supply base as well as the company’s low-cost engineering. Each of the two has the right to sell its brands. In combination, they are set to enjoy a 14% market share.
Ford is pleased about the fact that it will manage to lower its expenses while at the same time increasing scale in India. Last year wasn’t impressive for the company which fetched quite minimal profits.
The modern times continue witnessing quite a significant number of auto-manufacturers direct their capital into the latest technologies. Some of the budding technologies include electric vehicles, as well as the in-vehicle connectivity.
However, some reports show changes in the major markets around the globe. The major markets have been the US, Europe, and China. Sales in these markets have been going down over the past few years. This is something that has prompted the leading vehicle manufacturers to turn to more cost-saving business strategies.
Ford’s Chief Executive Jim Hackett has been a progressive leader during his term in office. He has seen the business giant strike partnerships with technology firms, companies, and startups as well. These parties have always benefited by gaining access to leading technologies. The spreading of risks is the other thing.