Why Did Ford Exit The Indian Market?

9th September 2021, the American carmaker ‘Ford’ announced its departure from the Indian market. This means that Ford India will be shutting down its operations in India, which includes the domestic production of its cars. But the company will continue to manufacture the export vehicles till 2022.

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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.

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The Main Consent!

During the presence of Ford in the Indian market, the company has invented many resources including time and money.

• But for the past decade (10 years) Ford has registered a loss of more than $2 billion.
• Next, there is no concrete evidence for the demand for new vehicles will increase.
• Hence, they had to take difficult but necessary steps to sustain the profitability considering this business for the long term.

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Why This Decision?

Considering the Indian automotive market we think, it was fairing undoable for Ford to sustain itself in the market.

• To begin with, they witnessed a massive loss of more than $2 billion dollars.
• The cost of non-operating assets in 2019 was like a sledgehammer hitting a thin pane of glass. Just to make myself clear, this costed company $0.8 billion just in 2019.
• Next, the poor sales of cars were further escalated by the situation caused by the COVID-19 pandemic.
• This also translates to poor export numbers, many vehicles are manufactured in India and are exported to other countries. Again this is what was still keeping Ford in the domestic automotive market.
• Now, let’s clear a little with numbers. In 2020 June, Ford sold about 2,872 cars but in June 2021, the tally was a lower 2,790 units.

  

• Moving on, we also think that Ford’s exit could also relate to the broken joint venture between Ford and M&M (Mahindra and Mahindra. This was something that was planned in October 2019 but was shelved in January 2021.

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Did Ford have any Plans?

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!

What is Ford left with now?

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.

Now, What is the future of Ford in India?

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!

What are your thoughts on Ford’s exit from the Indian market? Let us know in the comment section. Also, do let us know what do you think, is this the best solution for the company?

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