The American automaker has released an official statement stating that they will be closing both of their manufacturing plants – Sanand and Maramalai factories in India by the second quarter of 2022. Ford will be focusing their efforts on niche Completely-Knocked-Down (CKD) and Completely-Built-Up (CBU) operations in the coming future instead. The company has been going through their worst crisis in its 25-year tenure in the Indian market with no new models expected in the future and a current product portfolio that is dated, big drop in domestic sales and has witnessed severe disruptions due to the COVID-19 pandemic. As per Ford, sales of current products such as Figo, Aspire, Freestyle, EcoSport and Endeavour will cease once existing dealer inventories are sold.
In a statement released, the company says, “Ford will continue to provide customers in India with ongoing parts, service, and warranty support. As part of the plan, Ford India will wind down vehicle assembly in Sanand by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022.”
Ford had 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 India said it took these actions after investigating several options, including partnerships, platform sharing, contract manufacturing with other OEMs, and the possibility of selling its manufacturing plants, which is still under consideration.
“Despite these efforts, we have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing,” said Anurag Mehrotra, President and Managing Director of Ford India. “The decision was reinforced by years of accumulated losses, persistent industry overcapacity and lack of expected growth in India’s car market.”
Approximately 4,000 employees are expected to be affected by the restructuring as per Ford. It will maintain parts depots in Delhi, Chennai, Mumbai, Sanand and Kolkata and will work closely with its dealer network to restructure and help facilitate their transition from sales and service to parts and service support.
Now, Ford will focus on growing its Ford Business Solutions capabilities and team in the country, as well as engineering and engine manufacturing for export. As per Ford, the Ford Business Solutions plans to expand to provide more opportunities for software developers, data scientists, R&D engineers, and finance and accounting professionals, in support of the Ford+ plan to transform and modernize Ford globally.
Ford will begin importing and selling iconic vehicles including the Ford Mustang coupe. Ford says that customers in India also will benefit from the company’s plan to invest more than $30 billion globally to deliver all-new hybrid and fully electric vehicles, such as Mustang Mach-E.
The decision comes after the American automaker Ford and Indian automaker Mahindra and Mahindra decided to part ways before the results of the engine and platform sharing pact could reach the mass market, earlier in March 2021. Both companies had decided to enter into a joint venture as per which, Mahindra would have acquired Ford’s India operations and in turn, Ford would have helped Mahindra enter several international markets. Ford was developing three new SUVs for India in partnership with Mahindra. Out of the three SUV’s one was a compact SUV which was originally scheduled to be launched in the country in 2022. And as per the plans, this Ford C-SUV built by Mahindra was to be underpinned by the new XUV700’s platform. Additionally, Mahindra’s engines were to be used for the remaining two upcoming Ford SUVs and now this plan has also been shelved. Mahindra was also supposed to supply a 1.2-litre turbocharged petrol engine (XUV300’s unit) for the Ford EcoSport.
Ford, however, did recently update the Figo, Aspire and Freestyle variants in India earlier this year in February and was expected to come out with the EcoSport facelift for the upcoming festive season.