Ford motor india to close both cars manufacturing Plants in India

Ford to end car manufacturing in India

Ford Motor Company will discontinue producing vehicles in India and incur a $2 billion restructuring penalty, dramatically reducing its presence in a nation that previous management viewed as one of its three largest markets.

Ford said today that both of its factories in the nation will close, making it the latest carmaker to abandon the market. By the fourth quarter of next year, the American carmaker will close its assembly facility in Gujarat, as well as vehicle and engine production sites in Chennai.

The manufacturer stated in a statement that production of cars for sale in India will cease immediately, affecting roughly 4,000 employees.

Years of cumulative losses, ongoing industry overcapacity, and a lack of projected development in India's automobile market bolstered the decision "Ford India's managing director, Anurag Mehrotra, stated. “We have not been able to establish a long-term profitable way ahead that involves in-country vehicle production."

According to a Reuters storey, Ford took the choice because it was not profitable to continue, and the procedure will take approximately a year to complete.

According to a source, the US manufacturer would continue to import some of its vehicles into the nation and will also help dealers in servicing current customers.

Ford is the latest manufacturer to pull out of India, joining the likes of GM and Harley-Davidson in exiting a market that once promised exponential development.

Foreign automakers have struggled to build a foothold in India's value-conscious market, which is dominated by Maruti Suzuki India Ltd.'s low-cost vehicles.

A key barrier has been the Centre's high tax system, which imposes charges as high as 28 percent on gasoline cars. Due to hefty tariffs, Toyota Motor Corp. said last year that it will not expand further in India.

Ford's actions are a further setback for Prime Minister Narendra Modi's Make-in-India initiative, which promotes businesses to manufacture in India. Before committing to building a plant in India, Tesla Inc. has pushed Modi's administration to enable it to import cars at a lower cost.

Ford India has lost over $2 billion in the last decade and has written down the value of its company by roughly $800 million in 2019.

When India's economy opened up in the early 1990s, Ford was one of the first global automobile makers to enter the country. The firm originally opened its doors in 1926, but it closed down in the 1950s.

Ford will import and sell some vehicles following the plant closures, including Mustang coupes, but sales of models such as the Figo, EcoSport, and Endeavour will end once existing dealer inventory is exhausted.

Before the start of normal trading, Ford shares fell 0.6 percent. This year, the stock has increased by 48 percent.