- Friday, April 26, 2024
By: Shubham Ghosh
AUTOMOBILE giant Ford has decided to stop making cars in India because it doesn’t see a way to profitability in the country. The American car-maker entered India 25 years ago but still has less than two per cent of the country’s passenger vehicle market. It thus becomes the latest automaker to exit a major growth market where Asian players have dominated.
In a statement on Thursday (9), Ford said that it had accumulated operating losses of over $2 billion in a decade in India but demand for its new vehicles remains weak.
“Despite (our) efforts, we have not been able to find a sustainable path forward to long-term profitability,” Ford India head Anurag Mehrotra said in the statement.
Ford will shut down operations at its factory in Sanand in the western Indian state of Gujarat by the fourth quarter of 2021 and engine manufacturing unit in Chennai in the southern Indian state of Tamil Nadu by next year.
Ford has a capacity to produce around 440,000 cars in India in a year across both plants but is only using about 25 per cent of that, data intelligence company Global Data said.
The automaker will however continue to sell some of its cars in India through imports and will also give support to dealers to serve the existing customers. Its decision to shut production in India is likely to affect about 4,000 employees.
The decision to shut its production in India came after Ford and Indian maker Mahindra & Mahindra failed to reach a joint venture partnership that would have allowed the American maker to continue producing cars at a lower cost than now but shut its independent operations.
According to a report by Reuters, Ford’s decision to stop production in India following its exit from Brazil earlier this year shows the pressure that global automakers are facing to invest more in electric and automated vehicles besides connected vehicle technology.
It said global automakers once sought a presence in every market and were even willing to lose money to achieve the end but now, major companies like Ford, General Motors, Renault and others are changing strategies from being into loss-making ventures to redirecting capital to electrification and investment in technology.
Ford’s decision to withdraw production from India also comes as a setback for prime minister Narendra Modi’s ‘Make in India’ campaign. Ford’s decision comes in the wake of other US makers like General Motors and Harley Davidson that have left India in recent times.
