Automobile dealers want Union government to intervene in Ford exit

As Ford readies to drive out of India leaving thousands of its employees and dealers behind, the Federation of Automobile Dealers Associations (FADA) has decided to urge the Indian government to intervene and force Ford India to continue services for a “deserving period”.

While Ford has promised to compensate dealers who continue their services for vehicle owners, Vinkesh Gulati of FADA was quoted as saying by The Indian Express: “That promise is not going to compensate for the huge investments made by dealers. Ideally, the government should step in and ensure that the company continues their services for a deserving period, as they are still selling their vehicles in India.”

Ford’s plan to stop manufacturing vehicles for sale in India is expected to hit thousands of workers directly and many others in related sectors. The company recently announced that it would stop vehicle assembly at its Gujarat plant by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022, leaving only the “Business Solutions” service operational in India.

Also read: Ford in talks with another carmaker for transfer of Chennai plant: TN govt

One of the concerns that FADA has is that while companies exiting a country promise to continue service support, “it does not work in the long run because there are spare parts issues, manpower issues”.

The Express report said FADA CEO Saharsh Damani highlighted the impact of the exit on dealers, their employees and their families, and the distress calls the association has been receiving. “Outside auto retail, component manufacturers who supply Ford in Gujarat and Tamil Nadu will feel the impact,” he said.

FADA stated that there are 170 dealers and 391 outlets with an investment worth Rs 2,000 crore. “While Ford India employs 4,000 people, dealerships employ around 40,000 people…. Ford India dealers currently hold 1,000 vehicles, which amount to Rs 150 crore via inventory funding from reputed Indian banks… Ford India also appointed multiple dealers until five months back. Such dealers will be at the biggest financial loss in their life,” the organisation said in a statement.

Many of Ford’s employees in both states are yet to receive communication from the company about their compensation packages and job status. Some are trying the wait-and-watch approach, while many others refuse to accept the shutdown. Dealers are reporting cancellation of bookings from customers ever since news broke of Ford’s exit.

Apart from FADA, Pattali Makkal Katchi (PMK) leader S Ramadoss has asked the state and central governments to hold talks with the Ford management and look into options to continue their operations.

Also read: Ford exit: Why has another US carmaker run out of gas in India?