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After reflecting on their future in India for the past two years and almost crossing the finish line by sealing a vital joint venture with an Indian automaker, Mahindra & Mahindra, which was sadly canceled at the end of the year Ford Motor India was forced to bite the bullet last year and stop. Sadly, the world’s fifth-largest auto market has become a graveyard for iconic American automakers, starting with General Motors in 2017, then Harley-Davidson last year, and now the Blue Oval. Incidentally, Ford started its activity in India in 1995 in partnership with Mahindra & Mahindra.
The reality of the situation
It has been over 25 years since Ford entered the Indian market and since then they have set up two factories, one in Chennai, South India, and the other in Sanand, Gujarat in the west. With low demand for their vehicles and underutilization of factories and struggling to manage less than 2% of the passenger vehicle market, Ford has suffered operating losses of over $ 2 billion in the past 10 years. and a $ 0.8 billion non-operating impairment charge. active in 2019.
As losses accumulated, Ford could not afford to operate these two factories, as vehicle assembly in Sanand will cease by Q4 2021 and vehicle and engine manufacturing in Chennai by. the second quarter of 2022.
Although India is home to and will remain Ford’s second largest salaried workforce in the world, around 4,000 employees are expected to be affected by the restructuring and the ripple effect will also be felt in its retail centers.
What’s next for India?
Ford is not leaving India completely as it will continue plans for Ford Business Solutions and manufacturing engines in Sanand for the export market. It will continue to rely on its suppliers to support the manufacture of engines for exports and for parts of its global products, as well as its suppliers and vendors. The company will also continue to support operations with service, spare parts and warranty support, but in reality the service network will shrink rapidly.
Ford has stopped production of its current products such as Figo, Aspire, Freestyle, EcoSport and Endeavor and will turn to the niche market of importing cars like the Mustang Coupe, the Mustang Mach-E and the Ranger pickup truck. The company’s long-term plan is to focus on electric and hybrid vehicles and that’s why Ford pulled out of Brazil in January of this year and closed three manufacturing plants.
How did Ford get to this precarious position?
When Ford decided to move to India in 1995, it was not only a positive sign and boost for the Indian economy, but it was great news for automotive customers and enthusiasts who don’t. only had a handful of auto options. By the early 2000s, India’s GDP had doubled and it was the 11th fastest growing market in the world. With the times changing rapidly, unfortunately, Ford did not do it in India. The first car Ford launched was the Escort, which was a product on its last legs in the world market, and the sedan was bombed because of its price, and its underpower didn’t help either.
In 1999, Ford released the compact sedan, the Ikon, which was Ford’s first success story, and this car remained for two generations in the span of 12 years. As popular as it was for its advanced driving dynamics, its Achilles heel was insane maintenance costs. It was so expensive that it was almost double the price of its direct rivals. Sadly, Ford didn’t return to the drawing board with this colossal problem staring at them and that misstep continued until they released the very successful hatchback, the Figo, in 2010. This car was in. makes one of the most affordable vehicles to maintain, but after dragging its feet for so many years, it took the company to convince buyers. 2013 seemed like Ford had finally caught the pulse of the market when it launched the compact SUV, the EcoSport. This SUV became the Blue Oval bestseller and remained one of the most respected vehicles in its segment until the company decided to shut the shutters.
Unfortunately, the writing was on the wall as Ford, being one of the first to enter the Indian market, was still unable to understand its price sensitive nature, which could have been the final nail in the coffin for them.
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