News Analysis

Why is Ford Motors exiting India

Parvatha Vardhini C | Updated on October 01, 2019

BL Research Bureau

Close on the heels of General Motors leaving India, Ford Motor Company too is transferring its India operations to a joint venture with Mahindra & Mahindra (M&M) . M&M will hold the controlling stake of 51 per cent in the new entity, while Ford Motors will hold 49 per cent.

Sparks, but no fire

Although Ford had an early start after the Indian market opened up to foreign carmakers, it could never make any meaningful contribution.

As of 2018-19, the company’s volume market share in the passenger vehicles segment stands at just 2.75 per cent and it still sells under one lakh vehicles a year. In contrast, Maruti Suzuki and Hyundai together hold about two-thirds of the market share.

Despite stiff competition, Maruti’s market share has strengthened over the years. It stands at 51 per cent as of 2018-19. It was around 40 per cent a decade ago.

Ford had two big successes in terms of its product portfolio which could have helped the company move up the pecking order. One was the Figo, which was introduced in early 2010. Ford’s market share in 2010-11 inched up to 3.9 per cent that year, thanks to this launch.

The second was the Ecosport, which created a new sub-segment in utility vehicles called the ‘compact UV’ segment. However, stiff competition from launches such as the Duster (Renault), Vitara Brezza (Maruti Suzuki) and Creta (Hyundai) had its impact on the EcoSport too.

Brand Ford to continue

However, the silver lining is that unlike General Motors, which has completely exited the Indian market, Ford’s joint venture with Mahindra & Mahindra will help continuity of the Ford brand in India.

The joint venture will develop, market and distribute Ford brand vehicles in India. To begin with, the joint venture expects to introduce three new utility vehicles under the Ford brand, starting with a new mid-size sports utility vehicle.

It is noteworthy M&M has already been in an alliance with Ford since September 2017 to work on and develop various products/ solutions for the auto market.

Published on October 01, 2019

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