Ford shuts down both its manufacturing plants in India and cease entire production

Why Ford withdraws from India

Ford Motor Company will close its vehicle facilities in India and incur a $2 billion reorganization charge, dramatically reducing its presence in a nation that previous management viewed as one of its three largest markets. Ford said today that both of its factories in the nation will close, making it the latest carmaker to abandon the sector. By the fourth quarter of next year, the American carmaker will close its assembly facility in Gujarat, as well as car and engine production sites in Chennai.

The manufacturer stated in a statement that production of cars for sale in India will cease immediately, affecting roughly 4,000 people. Years of cumulative losses, ongoing industry overcapacity, and a lack of projected development in India’s automobile market all contributed to the decision, according to Anurag Mehrotra, managing director of Ford India. He claimed they have not been able to establish a long-term profitable way ahead that involves in-country vehicle production.

The firm said in a statement that Ford India will stop producing automobiles for sale in India instantly, with the Sanand vehicle assembly factory closing in Q4 2021 and the Chennai engine and vehicle assembly factories closing in Q2 2022. Ford India will reorganize its activities, with plans to considerably expand its Chennai-based Ford Business Solutions team and bring some of Ford’s famous global cars and electrified SUVs to market, while ending vehicle production in India.

How the local industry was impacted

Before the beginning of regular trading, Ford shares fell 0.6%. This year, the stock has increased by 48 percent. Foreign manufacturers have struggled to build a presence in India’s value-conscious market, which is dominated by Maruti Suzuki India Ltd.’s low-cost vehicles. A big barrier has also been the government’s high tax system, which imposes charges as high as 28% on fuel cars.

Due to excessive costs, Toyota Motor Corp. said last year that it will not develop further in India, while Harley-Davidson Inc. has departed the country. In 2017, General Motors Co. withdrew from the project. Ford’s actions are a further setback for Prime Minister Narendra Modi’s Make-in-India initiative, which promotes businesses to manufacture in India. Before committing to building a plant in India, Tesla Inc. has pushed Modi’s administration to enable it to import cars at a lower cost. When India’s economy opened up in the early 1990s, Ford was one of the first global automobile makers to enter the country. The firm originally opened its doors in 1926, but it closed down in the 1950s.

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