American car maker Ford will shut its car production facilities in India, 25 years after its first car rolled off the production line in the country. Ford’s exit will affect 4,000 jobs and its countrywide dealership network.

The company said the slowdown in India’s automobile market and the regulatory tightening in export markets along with the accumulated losses (in excess of $2 billion) led to the decision of ramping down manufacturing in India. The car maker will wind down vehicle assembly at Sanand, Gujarat, by the fourth quarter of 2021 and the Chennai operations by the second quarter of 2022. But engine production at Sanand will continue to serve the requirements of its global units. “We couldn’t reap the benefits of huge investments we made... The slowdown in the domestic market could be the function of performance of our own products, or the industry has been softer than what we anticipated. So, a combination of external and internal factors,” said Anurag Mehrotra, President and MD of Ford India.

The regulatory tightening in key export markets affected volume despatches from India. Ford India uses only about a fifth of its capacity of 4.4 lakh units a year.

“Ford has invested $2.5 billion in Indian vehicle manufacturing. For Ford India to continue its operations, we needed to show a path forward to a reasonable return on investments. Unfortunately, we are not able to do that, and we are now left with no other option but to restructure the business, Mehrotra said. Under the revised plan, Ford will continue its IT and engineering services operations, which employ over 10,000 at the Chennai facility. It will sell imported premium and EV models in India and continue vehicle servicing, after-market parts sales, and warranty coverage for its customers.

TN government

Reacting, a senior Tamil Nadu government official said the Ford factory near Chennai is a good asset. “It’s a ‘free hold’ land with Ford owning majority of the land at its Chennai plant. It is up to them to decide what they will do with the plant. From the government’s side if somebody shows interest to take, it will be facilitated. We have time till June 2022. There may be some takers.”

“We will examine the issues arising out of the situation and deal with them accordingly in due course,” said Gujarat’s Additional Chief Secretary for Industries Dept, Rajiv Kumar Gupta.

(With inputs from T E Raja Simhan in Chennai, Rutam V Vora in Ahmedabad)

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