Home / Auto News / Ford Motor to cease making cars in India, take $2 billion charge

Ford Motor Co. will stop making cars in India and record roughly $2 billion in restructuring charges, scaling back significantly in a country that past management saw becoming one of its three biggest markets.

Ford today said that it will shut down both of its plants in the country, becoming the latest automaker to exit the market. The US automaker will wind down an assembly plant in Gujarat by the fourth quarter, as well as vehicle and engine manufacturing plants in Chennai by the second quarter of next year.

Manufacturing of vehicles for sale in India will stop immediately, and about 4,000 employees will be affected, the carmaker said in a statement. 

“The decision was reinforced by years of accumulated losses, persistent industry overcapacity and lack of expected growth in India’s car market," said Anurag Mehrotra, managing director of Ford India. “We have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing."

Ford made the decision as it was not profitable for them to continue, according to a Reuters report, adding that the process will take about a year to complete.

The US automaker will continue to sell some its cars in the country through imports, said a report, adding that it will also provide support to dealers to service existing customers.

Ford is the latest carmaker to cease production in India, following companies such as General Motors and Harley Davidson to exit a market, which once promised exponential growth.

Foreign automakers have found it difficult to gain a foothold in the value-conscious Indian market dominated by Maruti Suzuki India Ltd.’s cheap cars. 

The Centre’s high tax regime, which imposes levies as high as 28% on gasoline vehicles, has also been a major roadblock. Toyota Motor Corp. last year said it won’t expand further in India due to high tariffs.

The moves by Ford are a further blow to Prime Minister Narendra Modi’s Make-in-India programme, which encourages companies to manufacture locally. Tesla Inc. has urged Modi’s administration to allow it to import cars more cheaply before it commits to setting up a factory in the country.

Ford India racked up more than $2 billion in losses during the past decade and wrote down the value of its business by about $800 million in 2019.

Ford was one of the first global car companies to enter India when the economy opened up in the early 1990s. The company first set up shop in 1926 but shut down its initial operation in the 1950s.

Following the factory closures, Ford will import and sell some vehicles, including Mustang coupes, but the sale of models including the Figo, EcoSport and Endeavour will cease once existing inventory at dealers is sold.

Ford shares slipped 0.6% before the start of regular trading. The stock has surged 48% this year.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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