Automobile company Ford Motor on Thursday said that it will stop manufacturing cars in India, owing to “huge losses”, Reuters reported.
Ford India will shut its operations at its Sanand plant in Gujarat by end of this year and its Chennai facility by next year.
The company’s India unit head, Anurag Mehrotra, said that the decision was taken as no “sustainable path forward to long-term profitability” was found.
The move is expected to hit 4,000 employees, according to Reuters.
Ford is the third major United States-based automaker to exit India after General Motors discontinued its operations in 2017 and Harley Davidson in 2020.
“Despite investing significantly in India, Ford has accumulated more than $2 billion [Rs 1.47 lakh crore] of operating losses over the past 10 years, and demand for new vehicles has been much weaker than forecast,” Jim Farley, Ford Motor Company’s president said, according to Moneycontrol.
Mehrotra added that the decision was “reinforced by years of accumulated losses, persistent industry overcapacity and lack of expected growth in India’s car market”.
The American automaker had invested more than Rs 1.47 lakh crore at the manufacturing plants at Chennai and Gujarat’s Sanand city.
The facility in Chennai was equipped to make two lakh cars and 3.4 lakh engines every year, and the Sanand plant could produce 2.4 lakh cars and 2.7 lakh engines in a year.
However, the company’s operations were hit hard in the aftermath of the Covid-19 pandemic.
In July, the plants were functioning at a 20% capacity, Moneycontrol reported, citing data from the Society of Indian Automobile Manufacturers.
Ford India said it took the “restructuring actions” after considering options like partnerships and contracting out the manufacturing operations. It was still considering selling off the Chennai and Sanand plants, the company said.
However, the automaker said that it will import and sell its iconic Ford Mustang and Ford Endeavour in India.
The company’s car spare parts depots will operate in Delhi, Chennai, Mumbai, Sanand, and Kolkata. A network of suppliers will be maintained to support the engine manufacturing facilities to ensure that the operations close smoothly, the company said.
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