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Ford to close India manufacturing plants after losses of $2 billion

Picture courtesy: Money control

Ford Motor Company will end manufacturing operations in India, shuttering its two plants in Sanand and Chennai, a decision forced by huge accumulated losses and lack of growth in a difficult market.

The firm is the latest big car firm to leave India in recent years.

In 2017, General Motors (GM) stopped making cars for the Indian market.

Ford will wind down the manufacturing of vehicles for exports in Sanand, Gujarat by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022, the American company said in a statement.

Ford will continue to provide customers in India with ongoing parts, service, and warranty support.

"Following accumulated operating losses of more than $2 billion over the past 10 years and a $0.8 billion non-operating write-down of assets in 2019, Ford is forced to do a restructuring to create a sustainably profitable business in India", the company said.

Ford will begin importing and selling must-have, iconic vehicles like the Mustang coup. Sales of existing products like Figo, Ecosport, Aspire, Freestyle, Endeavour will cease once existing dealers inventories are sold.

Approximately 4,000 employees are expected to be affected by the restructuring. Ford 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, the company added.

Having entered India in the mid-1990s Ford has struggled to make a mark in the Indian automotive space despite more than two decades of existence. At just 1.57 per cent market share, Ford ranked ninth on the list of India’s biggest carmakers. Ford sells five models in India – Figo, Aspire, Freestyle, EcoSport, Endeavour – in the price band of Rs 7.75 to Rs 33.81 lakh.

Ford tried to change fortunes in India with the proposed handshake with SUV-specialist Mahindra & Mahindra (M&M) a few years ago.

But in January 2021 both companies decided against going ahead with the partnership driven by the disruption caused by the pandemic. Instead of infusing funds for the joint venture with Ford which was Rs 1,400 crore, M&M routed the investment towards its own electric mobility programme.

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