Ford India has announced its decision of stopping the manufacture of vehicles in India. The company will now focus on expanding Ford Business Solutions, as part of its major restructuring program.
One of the main reasons behind this decision is that Ford feels that it can no longer make profit by making cars in India. Earlier the company had decided to enter into a joint venture with Mahindra to avoid this, but it decided to pull out of the Indian market after the venture with Mahindra failed.
“Despite investing significantly in India, Ford has accumulated more than $2 billion of operating losses over the past 10 years and demand for new vehicles has been much weaker than forecast,” Ford’s CEO Jim Farley said in a statement.
Ford announced on September 9 that its local manufacturing will cease immediately while its export manufacturing will stop at the Sanand plant by the fourth quarter of current financial year, and the Chennai engine and vehicle plants will stop manufacturing by Q2 of 2022.
The Sanand plant will still continue to produce and export engines for the Ford Ranger pickup truck, which couldn’t see light of the day in India. It will also maintain its parts depots in Delhi, Chennai, Mumbai, Sanand and Kolkata.
More than 4,000 employees will be affected by the restructuring of the company. Ford said that it will work closely with employees, unions, suppliers, dealers, government, and other stakeholders in Chennai and Sanand, to develop ‘a fair and balanced plan’ to mitigate the effects of the decision. It said that it would retain 500 employees at the Sanand Engine plant, and 100 employees for supporting parts distribution and customer service.
Made-in-India Ford cars like EcoSport, Figo, Endeavour, and Aspire will be discontinued after Ford pulls out of India. But the company said that it would continue its after-sales operations for the vehicles with service, aftermarket parts, and warranty coverage. Rather than being a sales and service touchpoint, Ford India will offer only parts and service support from now.