US carmaker Ford Motor Company has decided to gradually shut down its two facilities in India and the sales of its existing lineup of vehicles will end once dealer stock is exhausted.
The carmaker held a town hall for its employees. The decision will impact over 4,000 workers at its plants in Chennai and Sanand in Gujarat state. The top management told employees that it would “ramp down” production of its popular models such as Ford Figo, Ford Freestyle in India.
The US carmaker has been facing weak sales in India and dwindling exports. Ford’s Indian operation has posted over $1-1.5 billion of loss and write-off in the last couple of years alone, and the management sees the future operation as non-viable.
However, Ford will continue to sell its marquee brands Ford Mustang and Ford Endeavour in India. It will now focus on importing hybrid and electric vehicles to India as completely built units. The company claimed that existing customers and their service requirements will be taken care of.
The US carmaker will continue to manufacture vehicles for another seven quarters and scout for buyers for both its factories. The Sanand plant, currently operating at less than 10% capacity, is likely to be shut first. The Chennai plant may continue to make cars until 2022 to serve the pending global orders and the consolidated Indian operation.
Ford is now the second major US car brand to end local production, after General Motors packed up and shipped out completely in 2017.
Italian car brand Fiat also ended its operations in India last year due to unsatisfactory sales performance. The carmaker had brought some interesting models including Fiat Punto and Linea, but later it began losing ground due to low fuel efficiency and lack of features. It ceased production in January 2019 and completely stopped operations in March 2020.
Late last year, iconic motorcycle maker Harley-Davidson also ended its India operations. The high price of its motorcycles due to steep tax rates and competitive models from rival brands at affordable prices forced the US motorcycle brand to exit the Indian market.
Meanwhile, the Federation of Automobile Dealers Associations has urged Ford India to address the concerns of the dealers. It noted that Ford dealers currently have more than 1,000 vehicles and hundreds of demo units and pointed out that dealers who joined the network recently will be the worst hit.
Association President Vinkesh Gulati, expressing shock over Ford India’s announcement to shut down operations, did say that Ford India President Anurag Mehrotra has offered assurances that “they will adequately compensate dealers who continue to offer vehicle service to customers.”