Ford to end car production in India after a decade of losses | News

The company has stopped assembling vehicles for domestic sale at its Sanand plant in Gujarat. Sales of current products such as Figo, Aspire, Freestyle, EcoSport and Endeavor will be discontinued once existing dealer supplies are empty. Manufacturing of vehicles for export at Sanand will decline in the fourth quarter of this year. Ford was one of the top three exporting car manufacturers in India in 2019. Other production sites will supply the market.

However, engine production at the Sanand plant will continue for export markets selling Ranger pickups, saving 500 jobs. Ford will maintain a smaller supplier network to support the engine trade.

The vehicle and engine assembly plant in Chennai, Tamil Nadu, will close in the second quarter of 2022. Overall, job losses in Sanand and Chennai are estimated at around 4,000, according to reports.

Ford made a similar move in South America earlier this year by announcing the closure of all three assembly operations in Brazil.

Ford sales will continue in India from imports. The automaker said it would continue to provide customer support operations for imported vehicles including servicing, aftermarket parts supply and warranty coverage. Ford said it would maintain parts depots in Delhi, Chennai, Mumbai, Sanand and Kolkata, and would work with its dealer network to restructure and help facilitate their transition from sales and service to parts and service support.

Under capacity
Ford, which started making cars in India in 1995, has accumulated operating losses in India of more than $2 billion over the past 10 years. Installed capacity at the two vehicle plants totals 440,000 but the company is already operating at around 50% capacity for that time, which includes production for export. Demand for new vehicles was weaker-than-expected, admits Jim Farley, president and CEO of Ford, although the company won’t release exact figures. Last year’s output fell to 25% of installed capacity due to the impact of the coronavirus pandemic on production and sales.

Overall production in India between 2019 and 2020 was 3.4 million according to figures from the Society of Indian Automobile Manufacturers (Siam). That dropped to 3.06 million for the following year.

Ford said it had taken steps to end vehicle production after looking at several options, including a partnership. The proposed joint venture with Mahindra & Mahindra was scrapped in December last year. Ford is also looking at platform sharing, contract manufacturing with other OEMs, and the possibility of selling the plant, which is still under consideration.

“Despite these efforts, we have not been able to find a sustainable path to long-term profitability that includes vehicle manufacturing within the country,” said Anurag Mehrotra, president and managing director of Ford India. “The decision was reinforced by years of accumulated losses, persistent industrial overcapacity and lack of expected growth in the Indian auto market.”

Production for exports fell in 2017 when Ford decided to move assembly of the Ford EcoSport from its Chennai plant to its plant in Romania. Previously all EcoSports sold in Europe were imported from India. At the time Ford still saw India as a strategic export hub for vehicle bonds for the wider Asia Pacific region but a sharp increase in EcoSport sales in Europe convinced it to move production closer to market, eliminating a good percentage of production. .

The automaker was working to reduce delivery costs and lead times in India when it decided to insource and digitize fourth-party logistics management (4PL) in India, as part of a broader strategy in Asia Pacific, Africa and South America.

In 2018 Ford reorganized its business in Asia Pacific with the formation of the Ford International Markets Group (IMG) which includes India, South Africa, Thailand and Vietnam, while China created its own division. The automaker is in the process of setting up a new materials planning and logistics team at Ford IMG, but so far there’s no indication how the reshuffle will be affected by the decision to pull production from India.

The company said it will now focus on growing its Ford Business Solutions services in India. and provide more opportunities for software developers, data scientists, R&D engineers, and finance and accounting professionals. Ford Business Solutions will support Ford+’s modernization and growth plans, which include investments in electric, connected and autonomous vehicles, and other new mobility products and services. The automaker said it would invest more than $30 billion globally to deliver new hybrid and electric vehicles.

Leave a Comment