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Agencies
US car giant Ford is to stop making cars in India and shut down both of its plants in the country, according to a company statement.
Ford said it would close the plants in Gujarat and Tamil Nadu states by the second quarter of 2022 but it would continue to make car engines for export.
The firm is the latest big car firm to leave India in recent years.
In 2017, General Motors (GM) stopped making cars for the Indian market.
And last year, Harley-Davidson stopping manufacturing and massively scaled back its sales operations in what is the world’s biggest motorcycle market.
Ford was one of the first foreign auto giants to enter India back in the 1990s. The Escort was its first car launched in the country in a venture with the Mahindra Group. Its first solo model, the Ikon ,followed in 2001. Two decades later, the US car maker is shutting down its manufacturing plants here, having been unable to make a huge dent in the country’s automobile market.
Ford is the third US automaker to cease local production following the exit of rival General Motors and super bike maker Harley Davidson. The latter now has a deal with Hero MotoCorp, the country’s largest two-wheeler maker, to sell its motorcycles in India.
India’s car market is dominated by Japan’s Maruti Suzuki and Korean Hyundai. New launches in the last 2-3 years have helped homegrown Tata Motors climb to the third spot. Even newer companies like Kia have found good traction here. However, Ford, despite some good products like the Ecosport, has struggled over the years. The company has two manufacturing plants here—one at Sanand, Gujarat and the other in Chennai. However, reports suggest it was operating at just 20 per cent of its total installed capacity.
According to latest data from Federation of Automobile Dealers Associations (FADA), over 2.53 lakh passenger vehicles were sold in India in August. Maruti Suzuki remained the top company selling 108,944 vehicles and had a market share of 43 per cent. Ford India sold just 3,604 vehicles and had a market share of just 1.42 per cent.
“Despite investing significantly in India, Ford has accumulated more than $2 billion of operating losses over the past 10 years and demand for new vehicles has been much weaker than forecast,” said Jim Farley, the president and CEO of Ford Motor Co.
As part of the winding down plans, Ford will stop manufacturing vehicles for sale in India immediately. The production of vehicles that are meant for export markets will be wound down by the fourth quarter of 2021 at the Sanand plant. The Chennai engine and vehicle assembly plants will stop production by the second quarter of 2022.
Ford says it took these restructuring actions after exploring several options, including partnerships, platform sharing, contract manufacturing with other firms, and the possibility of selling its manufacturing plants, which is still under consideration.
“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,” said Anurag Mehrotra, president and MD of Ford India.
In 2020, Ford and Mahindra and Mahindra had announced plans to join hands for a second time. That would have rejuvenated Ford. However, the COVID19 pandemic upended these plans and the venture was called off earlier this year.
US car giant Ford is to stop making cars in India and shut down both of its plants in the country, according to a company statement.
Ford said it would close the plants in Gujarat and Tamil Nadu states by the second quarter of 2022 but it would continue to make car engines for export.
The firm is the latest big car firm to leave India in recent years.
In 2017, General Motors (GM) stopped making cars for the Indian market.
And last year, Harley-Davidson stopping manufacturing and massively scaled back its sales operations in what is the world’s biggest motorcycle market.
Ford was one of the first foreign auto giants to enter India back in the 1990s. The Escort was its first car launched in the country in a venture with the Mahindra Group. Its first solo model, the Ikon ,followed in 2001. Two decades later, the US car maker is shutting down its manufacturing plants here, having been unable to make a huge dent in the country’s automobile market.
Ford is the third US automaker to cease local production following the exit of rival General Motors and super bike maker Harley Davidson. The latter now has a deal with Hero MotoCorp, the country’s largest two-wheeler maker, to sell its motorcycles in India.
India’s car market is dominated by Japan’s Maruti Suzuki and Korean Hyundai. New launches in the last 2-3 years have helped homegrown Tata Motors climb to the third spot. Even newer companies like Kia have found good traction here. However, Ford, despite some good products like the Ecosport, has struggled over the years. The company has two manufacturing plants here—one at Sanand, Gujarat and the other in Chennai. However, reports suggest it was operating at just 20 per cent of its total installed capacity.
According to latest data from Federation of Automobile Dealers Associations (FADA), over 2.53 lakh passenger vehicles were sold in India in August. Maruti Suzuki remained the top company selling 108,944 vehicles and had a market share of 43 per cent. Ford India sold just 3,604 vehicles and had a market share of just 1.42 per cent.
“Despite investing significantly in India, Ford has accumulated more than $2 billion of operating losses over the past 10 years and demand for new vehicles has been much weaker than forecast,” said Jim Farley, the president and CEO of Ford Motor Co.
As part of the winding down plans, Ford will stop manufacturing vehicles for sale in India immediately. The production of vehicles that are meant for export markets will be wound down by the fourth quarter of 2021 at the Sanand plant. The Chennai engine and vehicle assembly plants will stop production by the second quarter of 2022.
Ford says it took these restructuring actions after exploring several options, including partnerships, platform sharing, contract manufacturing with other firms, and the possibility of selling its manufacturing plants, which is still under consideration.
“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,” said Anurag Mehrotra, president and MD of Ford India.
In 2020, Ford and Mahindra and Mahindra had announced plans to join hands for a second time. That would have rejuvenated Ford. However, the COVID19 pandemic upended these plans and the venture was called off earlier this year.
