Ford Motor will Stop Production and close both of its Indian Plants.


 Ford Motor Company will stop production and close both of its Indian plants.

Ford was one of the first multinational carmakers to join our market in 1994. After 27 years the American automaker is stopping manufacturing cars and SUVs in India.

Ford Motor will stop production and close both of its Indian plants.
Photo Credit: iStock Photo

Ford India Exit News: As part of a reorganization exercise, Ford Motor Co. will close two production plants in India and sell solely imported cars in the nation, according to individuals familiar with the situation.

The company will cease selling cars such as the EcoSport, Figo, and Aspire that are manufactured at its Chennai (Tamil Nadu) and Sanand (Gujarat) factories, where it spent approximately USD 2.5 billion.

In the future it will exclusively sell foreign cars in the country such as the Mustang." This is a restructuring decision, and the company will switch to imported cars," a source familiar with the situation stated.

The company is anticipated to make an official statement shortly. Ford has been trying to establish a name for itself in India's automotive industry for years.

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Ford India has a factory that can produce 6,10,000 engines and 4,40,000 cars per year. It also sold models including Figo, Aspire, and EcoSport to more than 70 countries.

Ford Motor Company and Mahindra & Mahindra started in January that they will cancel their previously planned automobile joint venture and instead maintain their separate activities in India.

The two businesses announced a deal in October 2019 under which Mahindra & Mahindra would purchase a majority share in a wholly-owned subsidiary of Ford Motor Co (FMC) that would take over the US company's vehicle operations in India.

The new company's mission was to expand the Ford brand's market and distribution in India, as well as sell both Mahindra and Ford automobiles in high-growth developing countries.

M&M agreed to buy a 51 percent interest in Ardour Automotive Private Ltd, a wholly-owned subsidiary of Ford Motor Company Inc, USA, for approximately Rs 657 crore as part of the deal.

FMC and/or any of its affiliates were to hold the remaining 49% ownership interest in Ardour.

The new company was also supposed to buy Ford India Pvt Ltd (FIPL), a wholly-owned subsidiary of FMC that has been doing business in India since 1995.

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The automotive company that was to be purchased included Ford India's car production facilities in Chennai and Sanand, but not the separate powertrain facility in Sanand, which is primarily utilized for FMC's worldwide markets, and the FIPL's powertrain division.

After General Motors, Ford is the second American carmaker to close facilities in India.

General Motors stated in 2017 that it will cease selling cars in India, citing a lack of progress after more than two decades of trying to create a name for itself.

The company sold its Halol factory in Gujarat to MG Motors, while keeping its Talegaon plant in Maharashtra open for exports but stopping operations in December.

Did Ford have any alternative way to continue in India?

Ford's only viable alternative for continuing to manufacture cars in our market was to establish a partnership or joint venture (JV) with another Indian manufacturer. With the formal announcement in October 2019, the American manufacturer formed a joint venture with Mahindra & Mahindra. 

However, on December 31, 2020, that transaction went through. Given that the JV had been in the works for almost 3 years, Ford had already made many of its future plans around it. 

This backfired severely for Ford since it would have had no new models in the near future without the JV, and the factories would have continued to be underutilized. We recently published a report on Ford's difficult future in India, in which we examined the company's position and alternatives in more depth.

What does Ford's future hold in India?

Ford company will maintain a presence in India and will expand its company business team to serve Ford worldwide. The team will concentrate on engineering, technology, and business operations, as previously stated.

Ford also said in their press statement that India would continue to employ the company's second-largest salaried workforce worldwide, and that, in addition to Ford Business Solutions, Ford India will continue to manufacture engines for export until Q2 2022.

However, Ford claims that the changes would impact approximately 4000 workers, and the firm will engage with employees, unions, and other stakeholders to arrange a fair settlement.

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