Why US Carmaker Ford Motor Is Shutting Manufacturing Plants In India

After operating for 25 years in India, American auto major Ford Motor Co has decided to pull the plug on local manufacturing. The US automaker said that it would "take a hit of about $2 billion as it does not see a path to profitability in India." The company, which has once tasted success with models like Ikon, Figo and EcoSport, has currently a passenger vehicles market share of less than 2 percent. Ford India will wind down operations at its plant in Sanand in Gujarat by the fourth quarter (Q4) of 2021 and vehicle and engine manufacturing in its Chennai plant by 2022.

Ford is the fifth automaker which has announced to stop manufacturing in India after MAN Trucks, General Motors, Harley Davidson and UM Motorcycles. Also, Honda Cars India shut its facility in Greater Noida, Uttar Pradesh. The Japanese carmaker discontinued its CR-V and Civic models in the country. However, Honda has another facility (Tapukara plant) in Rajasthan which continues to be operational.
 
Here's why Ford decided to end manufacturing in India:
 
* Weak demand: Ford said it accumulated operating losses of more than $2 billion in 10 years in India and demand for its new vehicles had been weak. Ford India head Anurag Mehrotra said, "Despite (our) efforts, we have not been able to find a sustainable path forward to long-term profitability."
 
* Low-cost cars: India's car market is mainly dominated by cars from Maruti Suzuki India and Hyundai Motor India. Ford, on the other hand, struggled for years to turn profitable in India. Ford and Hyundai entered India in the mid-1990s. But the two companies have a complete different fate when it came to business. While Hyundai turned into the country's second-largest player and Ford is shutting down its manufacturing ops.    
 
* Failed JV effort: Ford and Mahindra & Mahindra failed to finalise a joint venture partnership that would have allowed the US auto major to continue producing cars at a lower cost. 
 
* End of road for Mustang and Endeavour in India? No, the US automaker stated that it will continue to sell some of its high-priced cars in India (Mustang and Endeavour) through imports and it will also provide support to dealers to service existing customers.