Not been able to find a sustainable path toward a sustainable path forward to long-term profitability, Ford is winding up its business in India. The American automobile giant has now joined the league of international carmakers that includes Harley-Davidson and General Motors to quit India in recent months.
Anurag Mehrotra, MD and President of Ford India, described this as a difficult decision. “No matter what we tried and investigated, all our projections show we will continue to give sub-optimal returns to shareholders and investors. There is no other option, but to restructure.” Mehrotra said restructuring of its India business, that will prompt the company’s two plants in Chennai and Sanand shutdown by the second quarter of 2022, will not mean end of services and after-sales support for the roughly 10-lakh customers, as its 300-odd dealerships will remain open for service.
Ford, since its establishment in India in 1995, has invested over $2.5 billion. In 2020-21, the carmaker sold 48,042 units to garner a 1.8% share. To date, Ford’s losses stand at $2 billion. The company says it preferred to invest money in markets where it can fetch returns than sink further cash in India.
Mehrotra explained that after considering several options, including partnerships, platform sharing, contract manufacturing with other makers and the possibility of selling its manufacturing plants, they took the decision.
“Despite these efforts, we have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing,” he said. “Ford will work closely with employees, unions, suppliers, dealers, government and other stakeholders in Chennai and Sanand to develop a fair and balanced plan to mitigate the effects of the decision.”
However, dealers fear that over 40,000 employees at the company’s retail point also face a threat around their employment. Vinkesh Gulati, president of dealers’ association FADA, told ToI Ford dealers have invested around Rs 2,000 crore towards retail and service infrastructure. “The retail fraternity is really shocked to hear Ford’s announcement where it has said that it will shut down production.”
The American carmaker will continue its Ford Business Solutions programme in India where it employs 11,000 members engaged in software development, data science, R&D, finance and accounting. It will maintain a smaller network of suppliers to support engine manufacturing for exports and will closely work with other suppliers to ensure a smooth wind-down of vehicle manufacturing.