Highlights:
- The decision to close plants in Sanand and Chennai is the result of accumulated losses and lack of growth over a ten-year span.
- The move will effect at least 4,000 employees.
- Despite its more than two decades of existence, Ford has failed to create a name for itself in the Indian automobile market.
Since the end of Ford’s joint venture with Mahindra, the American brand’s future has been uncertain. The company said earlier this year that it is searching for a new partner for its India operations, but rumours about the brand closing down its India operations continued to circulate in media reports.
Ford, on the other hand, has announced that it would close its India operations and shut down production in the country. The company will immediately stop manufacture of existing vehicles for the domestic market and will discontinue export operations at its Sanand and Chennai plants by the fourth quarter of 2021 and the second quarter of 2022, respectively. Ford will continue to sell existing vehicles such as the EcoSport, Endeavour, Figo, Aspire, and Figo Freestyle until stock runs out, and no new vehicles will be manufactured.
This may come as a surprise to many, as images of the EcoSport facelift, which is scheduled to be officially released this year, showed that the company intended to continue operations here. This was reinforced by the recent addition of the Ford Figo Automatic.
However, it turns out that India is not a lucrative market for Ford in terms of investment, leading to the company’s decision to close its operations here. In 2019, the firm experienced nearly $2 billion in operational losses and a $0.8 billion non-operating asset write-down. Ford, on the other hand, will continue to offer after-sales and service support to consumers in India. The firm will, however, have fewer consumer touchpoints in the country, and dealerships will be transformed into service entities.
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Ford will continue to rely on Indian manufacturers for parts for its global products. Ongoing support from suppliers and vendors of Ford Business Solutions will also continue. It is important to mention that the company’s decision to discontinue manufacturing in India would have an impact on about 4,000 people. The business stated that it will collaborate with workers, dealers, the government, and other stakeholders to “minimise the impact of the decision.”
But does this imply Ford will follow in the footsteps of General Motors and shut down all operations in the country? The firm has stated that it would stop manufacturing vehicles in the country but will continue to sell imported models. Perhaps the Ranger pick-up truck seen here earlier this year will also make its way to India via the CBU route. More significantly, Ford said that it will introduce imported cars such as the Mustang Coupe and the Mach-E electric SUV to our shores.
Ford Motor Company President and CEO Jim Farley stated, “Despite considerable investments in India, Ford has accrued more than $2 billion in operational losses over the last decade, and demand for new vehicles has been far lower than expected. ” He further added, “I want to be clear that Ford will continue to take care of our loyal customers in India, working together with Ford India’s dealers, who have all long supported the company. India remains strategically essential to us and will continue to be a big and vital workforce base for Ford internationally, due to our growing Ford Business Solutions team.”
