Ford to stop manufacturing cars in India, shut down plants

In 1992, Ford Motor Company was one of the first global car manufacturers to enter the Indian market. Ford Motor Company, however, has decided to end manufacturing operations in India.

About 4,000 employees would be impacted by the phased closure of its two production sites in Gujarat and Tamil Nadu, where it has accumulated losses of more than $ 2 billion in the last ten years.

According to a statement, by the end of 2021, Ford will stop making vehicles for export in Sanand, Gujarat, and will stop making engines and other vehicles in Chennai by the end of 2022.

A global automotive company has exited the local manufacturing market in India for the second time in the last three years. US giant General Motors stopped selling cars in India in 2017 after entering the market just a few years previously.

Ford joins a growing list of global automakers terminating operations in India:

Global automakers have shuttered operations in the fourth-largest market in recent years, including Ford. On that list may also be found General Motors (GM), Ford’s American rival, and Harley-Davidson, an American motorcycle company.

It comes after Ford ended talks with Mahindra & Mahindra to transfer its local operations. There were also reports that Ford India was negotiating with mobility company Ola about manufacturing electric scooters before the latter went it alone and set up a gigafactory of its own.

In the last few years, the auto giant had been operating at 20 percent of its production capacity, half of which they exported.

With a 1.4 percent share in the Indian market in August, Ford fell well short of Maruti Suzuki’s and Hyundai Motor’s combined market share of more than 60 percent.

It will significantly expand the team to 11,000 personnel to help the company support its global operations once it has expanded its CBU (Completely Built-Up Unit) sales.

Impact of this decision:

Despite entering the Indian automotive market more than two decades ago, Ford has not made a sustained mark in the country’s automotive market. As a result, the country’s most basic mode of transport is taxed at 28 percent GST, which matches that of a luxury good, and the company feels unrecognized.

• Some of its premium and electric vehicles will be imported and sold in India.
• After exhausting dealer inventories, Figo, Aspire, Freestyle, EcoSport, and Endeavour will no longer be sold in the Indian Market.
• With an investment plan of $ 22 billion through 2025, Ford has prepared an electric vehicle strategy and electrifies existing products, including the Mustang, F-150, and Transit.
• Mustang Mach-E and other hybrids and fully electric vehicles will be available in India as well.

North America and Europe seem to be the focus of Ford’s EV strategy. In Europe, it is partnering with carmakers such as Volkswagen, particularly for markets where Ford itself does not have scale. While India’s auto market has been described as harsh to crack, Hyundai subsidiary Kia Motor and China’s MG Motor are exceptions, making significant inroads over the last couple of years.

 

CONCLUSION

As a result of accumulated losses over the past decade and a lack of growth, Ford Motor Company announced the closure of its Sanand and Chennai plants. There will be at least 4,000 affected employees when the move takes place.

They also drafted a fair and balanced plan to minimize the decision’s impact by collaborating with employees, labor unions, suppliers, dealers, government, and other stakeholders in Chennai and Sanand. As a result, business solution workers, including software developers, data scientists, engineers, and finance and accounting professionals, will be added to its already 11,000-member employee base in India in the coming years.