New Delhi: On Friday, Ford Motor Company has announced that it is forced to shut down manufacturing operations in India and will soon close down manufacturing plants in Sanand and Chennai. The company has cited 'huge accumulated loses' and 'lack of growth' as the reason for the exit and termed India as a 'difficult market'.
In a statement, the company announced that the manufacturing plant in Sanand, Gujarat, will be closed by the end of 2021 while the the manufacturing of vehicle and engine in Chennai will come to a complete halt by the second quarter of 2022.
This is the second time that a global automotive brand has announced its exit from India. Previously, General Motors had announced its exit from the Indian market in 2017.
Ford Motors alleged that after facing an accumulated loss of $2 billion in 10 years and a non-operating write down of assets of $0.8 billion in 2019, the company has taken the decision to shut down in order to "create a sustainably profitable business in India".
The president and CEO of Ford Motor Company said, "As part of our Ford+ plan, we are taking difficult but necessary actions to deliver a sustainably profitable business longer-term and allocate our capital to grow and create value in the right areas. Despite investing significantly in India, Ford has accumulated more than $2 billion of operating losses over the past 10 years, and demand for new vehicles has been much weaker than forecast."
Further, Anurag Mehrotra, president, and managing director of Ford India said, "Despite these efforts, we have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing. The decision was reinforced by years of accumulated losses, persistent industry overcapacity, and lack of expected growth in India's car market."
About 4000 employees of the company will be affected by this decision. The company has asserted that it will "develop a fair and balanced plan to mitigate the effects of the decision".
The parts depot in Delhi, Chennai, Mumbai and Sanand will be maintained and its dealer network will be dealt with by the automobile company. In addition, a smaller network of suppliers will be maintained to support engine manufacturing. Also, India-based suppliers will continue to provide parts for its global products.
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