Ford becomes the third major carmaker to exit India after General Motors and Daewoo.
The curtains have come down on Ford India’s India innings with the last unit of the Ecosport compact SUV, built for export markets, rolling off the production line its Maraimalai Nagar facility on July 20. This brings to a close the US carmaker’s stint of making cars and SUVs in India for domestic and export markets.
Ford becomes the third major carmaker to exit India after General Motors and Daewoo. Ford had announced that it would stop selling cars in India on September 9, 2021, but would continue to build cars for its export markets.
The newer, more advanced Sanand facility in Gujarat was the first to shut shop as the models produced there – the Figo and Aspire – were slowly taken off the shelves not just in India, but overseas too due to lesser demand and end of product life. Tata Motors has signed an MoU at the end of May to acquire the plant which came as a lifeline of sorts for the plant’s 6,000 workers.
While there were several reasons for Ford to pull the plug on its manufacturing operations in India, the key reason was poor capacity utilisation. Both facilities, which can make over 4 lakh units annually, were only managing 80,000 cars (around 20 percent of the capacity), with half of those being exported. Also, Covid changed the entire scenario and Ford’s global headquarters was also working on its own strategy to enter into the EV domain.
Another factor that contributed to Ford’s decision to exit was its failed partnership with Mahindra & Mahindra which was announced in 2019 and withdrawn a year later. Ford also confirmed that the brand has accumulated over $2 billion (around Rs 16,000 crore) in operating losses over the past 10 years and demand for new vehicles had been weaker than forecast. Ford was earlier planning to complete production of the pending orders for the EcoSport in June 2022 but worker unrest and talks regarding compensation led to delays and the deadline was extended till the end of this month. Six months after Ford announced its exit, it said it was “exploring the possibility of using a plant in India as an export base for EV manufacturing” under the government’s PLI scheme. Ford, however, dropped out of this which effectively means India wasn’t going to be part of its global EV business.
With Ford finally bringing the shutters down, it remains to be seen what will happen to the plant. Ford’s workers were hoping that the plant would be bought by another OEM, and this meant that they would keep their jobs. The workers were unhappy with the compensation that Ford was offering them, and for weeks in June were on protest outside the plant, with some employees also agitating inside. There were stories doing the rounds that Foxconn of China was keen to buy the plant but those have since been denied.
The plant employed 2,000 people, and with it now headed for closure in 10 days’ time, their fate hangs in the balance given that jobs are scarce to come by and even for gainful employment in the emerging EV sector, a new set of skills are required including mechatronics which the workers may not possess.
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