Shut Shop: American Car Manufacturer Ford Motor To Halt Production In India

American multinational automobile manufacturer Ford Motor Company will shut its car factories in India but will continue engine manufacturing for export markets. (Matthew Horwood/Getty Images)

NEW DELHI — Unable to penetrate the Indian automobile market, American manufacturer Ford Motor Company will shut its car factories in India but will continue engine manufacturing for export markets.

Ford is the second U.S. auto major after General Motors to shut plants in the value-conscious market.

“Ford restructures India operations, to cease vehicle manufacturing in Chennai and Sanand, progressively wind-down manufacturing of vehicles for export at Sanand plant by Q4 2021 and Chennai engine/vehicle assembly plants by Q2 2022,” the company said Sept. 9.

“To continue engine manufacturing for export. To grow Ford Business Solutions (FBS), focusing on engineering, technology, and business operations centers of excellence. Remain home to Ford’s second-largest salaried workforce globally,” the company said.

Reports said the decision to shut down both factories would impact over 4,000 employees.

The sale of models including Figo, EcoSport, and Endeavour will cease once existing inventory at dealers is sold.

Ford was one of the first global car companies to enter India when the economy opened up in the early 1990s.

In 2017, General Motors announced it would stop selling vehicles in India as there is no turnaround in its fortunes even after struggling for over two decades.

Following Ford India’s announcement that it is stopping the manufacturing of vehicles for sale in India with immediate effect, the automobile retail body Federation of Automobile Dealers Associations (FADA) urged the government to roll out the Franchisee Protection Act to protect the dealer community.

FADA on Sept. 9 released a statement on account of Ford India’s shocking announcement.

“FADA has been requesting Government of India to roll out Franchisee Protection Act as due to its unavailability. Auto Dealers are not adequately compensated like their counterparts in Mexico, Brazil, Russia, China, Indonesia, Malaysia, Japan, Italy, Australia, Sweden, and many other countries, where this law exists,” FADA president Vinkesh Gulati said.

“After General Motors, Man Trucks, Harley-Davidson, U.M. Lohia and multiple flies by night Electric Vehicle Players, Ford India is the 5th biggest exit from Indian markets since 2017.”

“The Auto retail fraternity is really shocked to hear another U.S. Auto Major, Ford India’s announcement where it has said that it will shut down production with immediate effect,” Gulati said.

“While trying to handle Dealer anxiety, Ford India President and MD, Anurag Mehrotra, called me personally and assured me that they will adequately compensate dealers who continue to offer vehicle service to customers. Though this is a good beginning, it is not enough as there are — 170 Dealers who in turn have — 391 outlets and have invested INR 2,000 Crore ($272.2 million) for setting up their dealerships.”

Gulati said that Ford India employs 4,000 people and dealerships employ around 40,000 people without displacing them from their home locations, thus being continuously skilled and up-skilled all this while.

“We will continue to serve customers in India w/ iconic vehicles (Mustang) & hybrid/fully electric vehicles (Mach-E). We are also committed to serving our existing customers with the same Feels like Family spirit,” Mehrotra said in a video.

“Ford India Dealers currently holds about 1,000 vehicles which amount to about INR 150 Crore ($20.4 million) via inventory funding from reputed Indian banks,” Gulati said.

“They also carry Demo Vehicles which are 100s in number. Moreover, Ford India also appointed multiple dealers until five months back. Such Dealers will be at the biggest financial loss in their entire life.”

As per Gulati, the Parliamentary Committee on Industry, in its report number 303, which got released in December 2020, had recommended the [Indian] Ministry of Heavy Industries that the government should enact the Franchise Protection Act for Automobile Dealers in the country so that it is a win-win for both, the Auto Original Equipment Manufacturers (OEMs) and the Auto Dealers, but will also be beneficial to customers in the long run.

(With inputs from ANI)

Edited by Vaibhav Pawar and Praveen Pramod Tewari

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