For several years, Ford India, the arm of the Michigan, US-based Ford Motor Company was identified in India through its “Josh Machine”, the Ford Ikon. Users of the Ikon vouched for its power and sturdiness. The success of the Ikon eclipsed the first product the company introduced in the Indian market as it re-entered it—the Ford Escort—after leaving India in 1953 following severe import restrictions.
It returned to the Indian market in the avatar of Mahindra Ford India Limited, a 50:50 joint venture with Mahindra & Mahindra. But the Escort was also known as a dependable, sturdy vehicle and some of its owners (notably Wipro chairman Azim Premji) were known to use it for quite a several years. However, after just 25 years of operations—not too long for an auto manufacturer—Ford has decided to exit India. (Its rival, Japan’s Toyota has been in India since 1997, while Czech automaker Skoda entered India in 2001.) Not that those years saw a smooth ride for the maker of iconic cars like the Model T, the Thunderbird and the Mustang. While it found big success in models such as the Ikon, the Endeavour and the EcoSport, others like the Mondeo and Fusion did not do as well as expected.
The company had posted operating losses of over $2 billion (Rs 14,600 crore) and demand for its vehicles was weak. It could not find a sustainable path forward to long-term profitability, according to Ford India head Anurag Mehrotra (Reference: indiatoday). Calling off a joint venture (JV) it had entered with Mahindra & Mahindra in 2019 citing the Covid pandemic made matters worse for Ford. The JV was aimed at developing, marketing and distributing Ford vehicles in India and some Ford and Mahindra products in the high-growth international markets. With that JV off the cards, Ford’s chances of survival in the Indian market grew bleaker.
Ford will shut down its Sanand (Gujarat) plant by the fourth quarter of 2021 and end vehicle manufacturing and engineering at its Chennai plant by 2022. However, it will continue to sell cars in India through imports, and media reports say this will see the import of some high-end models such as the Mustang Mach-e, the Mustang and the Ranger. Ford will also provide continuing support to dealers to serve existing customers. Around 4,000 of its staff will be impacted by the decision. The string of exits of big MNC firms from India does not augur well for the country, which has been seeing high unemployment numbers during the pandemic. General Motors’ exit in 2019 was driven by a decision to get out of non-profitable operations in a few regions including India, Russia and Western Europe. Harley Davidson left India as part of its ‘Rewire’ strategy to focus on select markets such as North America, Europe and some parts of Asia. The company had a loss of $96 million during the April-June 2020 period. This may not be a big loss in itself, but clearly, it did not seem to indicate good demand shortly. The pandemic has only made matters worse for auto companies as they were forced to keep their retail outlets shut during the lockdown period. Nevertheless, despite the company’s exit, Ford is assuring to provide all sorts of aftermarket support to the customers in the country. Over the past 3-4 years we’ve seen many renowned automotive giants wrapping up their business from India, including Harley Davidson, Chevrolet, Fiat and more. With now Ford also leaving India, there has to be a concrete reason. So, let’s all investigate it together.
Ford’s past plans that didn’t work
After the failed partnership with Mahindra and Mahindra, Ford was trying hard to keep its operations in India. Well, Ford surely was planning a long game in India, as they had planned a couple of new launches in India. But sadly all went in vain. Still, as per some sources, Ford was considering Hyundai Motors, Tata Motors, Skoda-Volkswagen group, Ola Electric and even some new EV startups for a venture. Nothing worked out!
Current Situation
As said earlier, sure Ford is shutting its domestic operation starting immediately, but it still keeps manufacturing cars for some international markets.
- This means, their manufacturing facility in Maraimalai Nagar, Chennai will be functional still the second quarter of 2022.
- Whereas the other in Sanand will be operational till the fourth quarter of this year.
- Both of the facilities are responsible for manufacturing cars as well as engines for export.
- However, because the company of pulling the plug on domestic manufacturing, about 4,000 employees will lose their jobs.
Future Of Ford in Indian Automobile Market
Taking the stress off, from the Indian customers, Ford will provide aftermarket services and support.
- Ford will also work in tandem with the dealers in Chennai, Mumbai, Delhi, Sanand and Kolkata to maintain the flow of spare parts.
- The American carmaker Ford still considers India as a large market, hence it will bring the vehicles via the CBU and CKD route.
- This is where Ford is planned to bring multiple hybrids and electric vehicles to India, which also includes the Mustang Mach-E.
And this marks the end of another reputed automaker to sail from the Indian shores. You’ll be missed FORD!
