Ford to end manufacturing in India, take $2 billion hit
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[September 09, 2021] By
Aditi Shah and Aditya Kalra
NEW DELHI (Reuters) -Ford Motor Co will
stop manufacturing in India and take a hit of about $2 billion as it
does not see a path to profitability in the country, becoming the latest
automaker to leave a major growth market dominated by Asian rivals.
The decision by Ford comes after it struggled for years to win over
Indian consumers and turn a profit. The carmaker entered India 25 years
ago but has a less than 2% share of the passenger vehicles market.
In its statement, 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.
"Despite (our) efforts, we have not been able to find a sustainable path
forward to long-term profitability," Ford India head Anurag Mehrotra
said in the statement.
"The decision was reinforced by years of accumulated losses, persistent
industry overcapacity and lack of expected growth in India's car
market," he said.
Ford follows other U.S. carmakers such as General Motors and Harley
Davidson which have already left India, a market that had once promised
exponential growth. The country is dominated by mainly low-cost cars
made by Suzuki Motor Corp and Hyundai Motor.
As part of the plan, Ford India will wind down operations at its plant
in Sanand in the western state of Gujarat by the fourth quarter of 2021
and vehicle and engine manufacturing in its southern Indian plant in
Chennai by 2022.
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A visitor is reflected as he takes pictures of a new Ford Aspire car
during its launch in New Delhi, India, October 4, 2018. REUTERS/Anushree
Fadnavis
The U.S. automaker will continue to sell some of its cars in India through
imports and it will also provide support to dealers to service existing
customers, it said. Around 4,000 employees are expected to be affected by its
decision.
The decision to stop production in India comes after Ford and domestic carmaker
Mahindra & Mahindra failed to finalise a joint venture partnership https://reut.rs/3tq3jnD
that would have allowed Ford to continue producing cars at a lower cost than
currently but cease its independent operations https://reut.rs/3zWIvX6.
The company said the decision to cease production was made after considering
several other options including partnerships, platform sharing, contract
manufacturing and the possibility of selling its manufacturing plants, which is
still under review.
(Reporting by Aditi Shah; Editing by Sanjeev Miglani, David Clarke and Susan
Fenton)
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