Ford to quit manufacturing in India, will shut down both plants!
According to a company statement, Ford will stop producing vehicles in India and close both of its factories in the country.
After the second quarter of 2022, Ford plans to shut down its Gujarat and Tamil Nadu facilities but would continue to produce vehicle engines for export. The company is the latest in a long line of large automakers to depart India.
For the Indian market, General Motors (GM) ceased production in 2017. And last year, Harley-Davidson halted production and drastically reduced its sales activities in the world’s largest motorcycle market.
When Ford initially entered India in the 1990s, it was one of just a few international auto titans to do so. As part of a joint venture with Mahindra Group, the Escort was the company’s first vehicle to be sold here. Ikon was released in 2001 and was the company’s first solo model. As a result of its inability to create a significant impression in the country’s vehicle industry, the US automaker is closing down its operations here.
Ford joins General Motors and Harley Davidson as the third US automaker to stop local production. Hero MotoCorp, India’s largest two-wheeler manufacturer, has agreed to sell the company’s bikes in India.
Maruti Suzuki of Japan and Hyundai of Korea dominate India’s automobile market. As a result of new product introductions in the previous two or three years, Tata Motors has climbed to third place. Even younger automakers, such as Kia, have been able to gain a foothold in the market. To be fair, Ford has struggled over the years, despite some excellent vehicles like the Ecosport. One is located in Sanand, Gujarat; the other is in Chennai. However, according to sources, it was only working at 20% of its complete installed capacity.
More than 2.53 lakh passenger automobiles were sold in India in August, according to the latest statistics from the Federation of Automobile Dealers Associations. Market share was 43 per cent for Maruti Suzuki, which sold more than 108,000 automobiles. With just 3,604 vehicles sold, Ford India had a market share of just 1.42 per cent in the country.
“Despite investing significantly in India, Ford has accumulated more than $2 billion of operating losses over the past 10 years and demand for new vehicles has been much weaker than forecast,” said Jim Farley, the president and CEO of Ford Motor Co.
According to Ford’s winding down plans, the company would immediately stop producing automobiles for sale in India. The Sanand factory will cease export car manufacturing in the fourth quarter of 2021. As of the second quarter of 2022, the Chennai engine and vehicle assembly factories will be shut down and their manufacturing will cease.
Following a thorough review of all possible alternatives, including collaborations, platform sharing and contract manufacturing with other companies, Ford says it has decided to restructure its operations.
“Despite these efforts, we have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing. The decision was reinforced by years of accumulated losses, persistent industry overcapacity and lack of expected growth in India’s car market,” said Anurag Mehrotra, president and MD of Ford India.
It was announced in 2020 that Ford and Mahindra will once again join forces. The Ford brand would have been revitalised as a result of this decision. But the COVID19 pandemic threw a wrench in the works, and the project was scrapped early this year.