Ford To Stop Making Cars In India After $2 Billion Accumulative Losses, Closure To Affect 4,000 Jobs

However, Ford will continue to provide customers in India with ongoing parts, service, and warranty support. 

(Representative Image/Getty)

Mumbai: Ford Motor Company on Thursday decided to cease manufacturing operations in India after the global vehicle maker incurred $2 billion of accumulated losses in the country, as the firm was unable to dent the price-sensitive Indian market. 

"As part of the plan, Ford India will wind down vehicle assembly in Sanand by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022," said the company in a statement. 

However, the company will expand its Chennai-based Ford Business Solutions team and bring to market some of Ford's iconic global vehicles and electrified SUVs. Ford will continue to provide customers in India with ongoing parts, service, and warranty support. 

"Following accumulated operating losses of more than $2 billion over the past 10 years and a $0.8 billion non-operating write-down of assets in 2019, the restructuring is expected to create a sustainably profitable business in India," said the company, a decision that would affect 4000 of the 11,000 employees in India. 

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"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," said Jim Farley, Ford Motor Company's president, and CEO. "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.

"I want to be clear that Ford will continue taking care of our valued customers in India, working closely with Ford India's dealers, all of whom have supported the company for a long time. India remains strategically important for us and, thanks to our growing Ford Business Solutions team, will continue to be a large and important employee base for Ford globally." 

Anurag Mehrotra, president and managing director of Ford India, said, "We are committed to taking care of our customers and working closely with employees, unions, dealers, and suppliers to care for those affected by the restructuring."

Ford India said it took these restructuring actions after investigating several options, including partnerships, platform sharing, contract manufacturing with other OEMs, and the possibility of selling its manufacturing plants, which is still under consideration.

"Despite these efforts, we have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing," Mehrotra said. "The decision was reinforced by years of accumulated losses, persistent industry overcapacity, and lack of expected growth in India's car market."

4,000 Jobs To Be Affected

Approximately 4,000 employees are expected to be affected by the restructuring. Ford will work closely with employees, unions, suppliers, dealers, government, and other stakeholders in Chennai and Sanand to develop a fair and balanced plan to mitigate the effects of the decision. 

Ford will focus on growing its Ford Business Solutions capabilities and team in the country and engineering and engine manufacturing for export. 

With more than 11,000 team members currently in India, Ford Business Solutions plans to expand to provide more opportunities for software developers, data scientists, R&D engineers, and finance and accounting professionals, in support of the Ford+ plan to transform and modernize Ford globally, said the statement. 

Ford's 500 plus employees at the Sanand Engine plant produce engines for export for the Ranger pickup truck. About 100 employees supporting parts distribution and customer service will continue to support Ford's business in India.

Ford will begin importing and selling iconic vehicles, including the Mustang coupe. 

Customers in India also will benefit longer term from the Company's plan to invest more than $30 billion globally to deliver all-new hybrid and fully electric vehicles, such as Mustang Mach-E. 

The sales of current products such as Figo, Aspire, Freestyle, EcoSport, and Endeavour will cease once existing dealer inventories are sold.

Ford will continue full customer support operations for these vehicles with service, aftermarket parts, and warranty coverage.