Ford’s sole remaining plant in India is now under scrutiny after the deal’s cancellation, raising suspicions that the American automotive giant might be contemplating a fresh start in the world’s third-largest auto market.
Image representing the floor of a Ford Motor Co automobile factory.
In response to queries, Ford stated, “We continue to explore alternatives for our manufacturing facility in Chennai and have nothing further to share.” It has been two years since Ford announced its withdrawal from the Indian market.
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In a surprising development, Ford Motor Co. has canceled its plans to sell its plant in Tamil Nadu to the JSW Group led by Sajjan Jindal, as reported by The Economic Times. This plant is Ford’s sole remaining factory in India, leading to speculations that the American automaker might be contemplating a fresh start in the third-largest auto market globally.
On the other hand, JSW Group has chosen not to respond to inquiries, according to the report. Initially, JSW had agreed to acquire the Ford plant for around $100 million. This deal came after the conglomerate secured a 35 percent stake in a joint venture with SAIC.
The decision for Ford’s exit was made amid substantial losses and a decline in passenger vehicle sales in 2021 due to the COVID-19 pandemic. Tata Motors acquired Ford’s Sanand plant in Gujarat in January to enhance its electric vehicle production.
The Maraimalai Nagar plant, positioned strategically near the Chennai port and spanning 350 acres, has been up for sale since Ford closed its India unit. With an annual capacity of 150,000 cars and nearly 340,000 engines, the plant ceased operations in July 2022.
If the sale is not canceled but delayed, other potential buyers for the factory include Vietnamese electric carmaker VinFast, eyeing entry into the Indian market, and another unnamed contender, as per the report. Initially, Mahindra and Mahindra had shown interest but did not aggressively pursue the opportunity.
Ford’s departure from India in September 2021 was presented as a strategic restructuring for sustainable profitability. Despite facing accumulated losses exceeding $2 billion over the past decade, Ford continued manufacturing cars and engines for exports until July 2022. Ford India recorded profits of ₹505 crore in FY23 from vehicle and engine exports before ultimately shutting down its vehicle manufacturing operations.
The surge in the Indian EV segment prompted global automakers to reevaluate their strategies for electric and internal combustion engine vehicles. In October, India-born Kumar Galhotra was appointed COO of Ford, indicating a potential reassessment of their India operations. Challenges posed by the pandemic and the dissolution of the M&M partnership further limited Ford’s options. Ford’s decision to cease manufacturing followed a thorough evaluation, including considerations for contract manufacturing, as disclosed during the restructuring announcement in 2021. Despite being selected for the government’s Productive Linked Incentive Scheme, Ford opted out of the scheme in May 2022.
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