Kolkata, India: American auto giant Ford Motors announced Thursday it will cease to manufacture vehicles in two of its Indian factories, although the company will not entirely pull out from the market.
“Ford India will cease manufacturing vehicles for sale in India immediately…[the company] will wind down vehicle assembly in Sanand by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022,” the company said in a statement.
However, the corporation will not completely quit the Indian market, instead, it will concentrate on its ‘Ford Business solutions’ in order to build a “sustainably profitable” business in the nation.
Despite its presence in India since the mid-1990s, Ford has struggled to build a name for itself in the Indian automotive market.
The US auto giant was rated ninth on the list of India’s largest carmakers, with a market share of barely 1.57 percent. In India, Ford sells five models: Figo, Aspire, Freestyle, EcoSport, and Endeavour, with prices ranging from Rs 7.75 lakh to Rs 33.81 lakh.
$2 billion losses?
Ford said it was compelled to restructure to develop a sustainably viable business in India after accumulating operating losses of more than $2 billion over] the last ten years and a $0.8 billion non-operating write-down of assets in 2019.
The American auto giant behind successful cars like EcoSports said it decided to restructure after looking into numerous options, including partnerships, platform sharing, contract manufacture with other OEMs, and the prospect of selling its manufacturing units, which is still being considered, MoneyControl reported.
“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,” Anurag Mehrotra, president, and managing director of Ford India.
The company has been running on loss as a local entity, exacerbated by the COVID-19 interruption and an outdated product range.
According to figures provided by the Society of Indian Automobile Manufacturers, Ford was only producing roughly 20% of its total capacity of 450,000 units at both factories as of July (SIAM).
Ford’s India exit comes less than a year after the company pulled out from the Brazilian markets where it had three plants, and first began operating in the 1900s.
For the Indian automotive market, Ford’s withdrawal is the second major exit, after auto behemoth General Motors pulled the plug from India in 2017.
Ford withdrawing from the two Indian manufacturing plants means nearly 4,000 people will lose their jobs, media reports said.
However, the company stated that it will continue to work closely with employees, unions, dealers, and suppliers to assist individuals who have been directly affected by the withdrawal.
It was noted that India will continue to house Ford’s second-largest salaried workforce in the world, and that, in addition to Ford Business Solutions, Ford India will continue engine manufacturing for export, as well as full customer support operations including service, aftermarket parts, and warranty support.
Ford also said that it plans to serve India with iconic vehicles, including the Mustang coupe.
“Customers in India also will benefit longer term from the Company’s plan to invest more than the U.S. $30 billion globally to deliver all-new hybrid and fully electric vehicles, such as Mustang Mach-E,” the statement said.