Ford stops building cars in India and gets a $ 2 billion hit


New Delhi-Ford Motor Company shuts down car production in India and sees no way to profitability in India, hitting about $ 2 billion and leaving major growth markets dominated by Asian rivals Become an automobile manufacturer.

US automakers entered India 25 years ago, but only less than 2% of the passenger car market has struggled for years to attract and profit from Indian consumers.

Ford said in a statement Thursday that demand for new cars was sluggish, with more than $ 2 billion in operating losses accumulated in India over a decade.

“Despite our efforts, we have not been able to find a sustainable path to long-term profitability,” Ford India’s Head Anurag Melotra said in a statement. rice field.

Ford’s decision to reduce losses in India came after leaving Brazil earlier this year.

Ford’s decision follows other US automakers that have recently left India, such as General Motors and Harley-Davidson.

Mehrotra said Ford’s decision was also reinforced by “a perpetual industry around capacity and the expected lack of growth in the Indian automotive market.”

By 2020, India will become the world’s third largest automobile market after China and the United States, and is expected to sell about 5 million vehicles annually. Instead, sales are sluggish at around 3 million units, still below Europe and Japan.

The Indian automobile market is dominated by low prices, mainly small cars manufactured by Suzuki Motor Co., Ltd. of Japan. The Martis Suzuki brand is dominated by Hyundai Motor of South Korea, accounting for the remaining three and accounting for seven of the top ten sellers.

Winding down

Ford is expanding its investment in electric vehicles (EVs) and advanced software. In May, it announced that it would increase EV spending by a third to $ 30 billion by 2030.

India was a low priority because Ford CEO Jim Farley has been in charge of many things since last year and limited financial resources, sources told Reuters earlier.

As part of the plan, Ford India will end operations at its plant in Sanand, western Gujarat by the fourth quarter of 2021, and by 2022 it will end production of vehicles and engines at its plant in southern India in Chennai. increase.

According to data intelligence company Global Data, Ford has the capacity to produce about 440,000 cars a year in India at both plants, but uses only about 25 percent of it.

A US automaker said it will continue to sell some cars through imports in India and support dealers to serve existing customers. This decision is expected to affect approximately 4,000 employees.

The decision to suspend production was made because Ford and Mahindra & Mahindra of India were unable to enter into a joint venture partnership. This allowed Ford to continue manufacturing cars at a lower cost than it is today, but shut down its independent business.

Ford said it considered several other options in India, including partnerships, platform sharing, outsourced manufacturing, and the possibility of selling manufacturing plants. This plan is still under consideration.

Ford will continue to operate Sanand’s engine plant, which exports engines for ranger pickup trucks to the world. In addition, we will continue to rely on our Indian-based suppliers for parts in our global products.

The Federation of Indian Auto Dealers Association said in a statement that it was shocked by Ford’s move, saying that the decision of a U.S. company to compensate dealers who also provide vehicle services to customers was “not enough.” ..

The association said in a statement that India has 400 Ford dealers and dealers have invested Rs 20 billion ($ 272 million) so far, and automakers have opened new dealers five months ago. He added that he had been appointed.

“Such dealers are the biggest financial loss in their lives,” he said.

($ 1 = 73.5740 Indian Rupee)