American auto major Ford Motor Company on September 9 said it’s “forced” to finish manufacturing operations in India and shut plants at Sanand and Chennai, thanks to “huge accumulated losses and lack of growth during a difficult market”.
Ford will wind down the manufacturing of auto for exports in Sanand, Gujarat by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022, a press release read.
This is the second major exit of local manufacturing operations in India by a worldwide automotive brand. US giant General Motors, which entered India just a few years before Ford, stopped selling cars in India in 2017.
Following accumulated operating losses of quite $2 billion over the past 10 years and a $0.8 billion non-operating write-down of assets in 2019, Ford is forced to try to to a restructuring to make a sustainably profitable business in India, the corporate further added.
Jim Farley, Ford Motor Company’s president, and CEO, Ford Motor Company said, “As a part of our Ford+ plan, we are taking difficult but necessary actions to deliver a sustainably profitable business longer-term and allocate our capital to grow and make value within the right areas. Despite investing significantly in India, Ford has accumulated quite $2 billion of operating losses over the past 10 years, and demand for brand spanking new vehicles has been much weaker than forecast.”
Ford India said it took these restructuring actions after investigating several options, including partnerships, platform sharing, contract manufacturing with other OEMs, and therefore the possibility of selling its manufacturing plants, which remains into account .
“Despite these efforts, we’ve not been ready to find a sustainable path forward to long-term profitability that has in-country vehicle manufacturing. the choice was reinforced by years of accumulated losses, persistent industry overcapacity, and lack of expected growth in India’s car market,” Anurag Mehrotra, president, and director of Ford India.
Approximately 4,000 employees are expected to be suffering from the restructuring. Ford will work closely with employees, unions, suppliers, dealers, government, and other stakeholders in Chennai and Sanand to develop a good and balanced decide to mitigate the consequences of the choice , the corporate added.
Ford India will maintain parts depots in Delhi, Chennai, Mumbai, Sanand, and Kolkata and can work closely with its dealer network to restructure and help facilitate their transition from sales and repair to parts and repair support.
The company also will maintain a smaller network of suppliers to support engine manufacturing for exports and can work closely with other suppliers to make sure a smooth wind-down of auto manufacturing. It also will still believe India-based suppliers for parts for its global products, and suppliers and vendors supporting Ford Business Solutions will still support the business as normal.
Ford has been a loss-making local entity burdened further by the COVID-19 disruption, and a dated product portfolio. As of July, Ford was operating at just around 20 percent of the installed capacity of 450,000 units that it’s across both the plants, as per data shared by the Society of Indian Automobile Manufacturers (SIAM).
Ford has invested over $2 billion in India at Chennai and Sanand manufacturing plants. The 350-acre Chennai plant features a vehicle-making capacity of 200,000 units and 340,000 engines a year. The Sanand plant cover 460 acres, which is that the younger of the 2 , features a vehicle-making capacity of 240,000 units and 270,000 engines a year.
Having entered India within the mid-1990s Ford has struggled to form a mark within the Indian automotive space despite quite 20 years of existence. At just 1.57 percent market share, Ford ranked ninth on the list of India’s biggest carmakers. Ford sells five models in India – Figo, Aspire, Freestyle, EcoSport, Endeavour – within the price band of Rs 7.75 to Rs 33.81 lakh.
Ford tried to vary fortunes in India with the proposed handshake with SUV-specialist Mahindra & Mahindra (M&M) a couple of years ago. The plan was to share manufacturing plants with M&M besides joint development of products and technologies