In a big setback to Make In India initiative, world’s 5th largest carmaker Ford has decided to quit India.
Is the automobile slowdown a reason?
How will Govt. convince other carmakers to stay in India now?
Ford Will Quit India; Forms JV With Mahindra
As per reports coming in, which has not been confirmed, Ford will end all operations in India in the coming months.
A new JV or Joint Venture will be formed, with Mahindra, wherein all the existing assets of Ford will be transferred to.
In this new JV, 49% stake will be owned buy Ford, wherein Mahindra will have 51% stake.
All existing automotive assets and employees of Ford working in India will be legally transferred to this new JV.
This way, Ford will quit India.
Ford has not confirmed this development, but has said that they are working with Mahindra “to develop avenues of strategic cooperation that help us achieve commercial, manufacturing and business efficiencies”.
As per Reuters, who broke this story, Ford and Mahindra had been engaged in strategic talks since last several months, and a formal announcement will be made soon.
What Next?
Right now, Ford has two factories in India: One in Chennai, and the other in Sanand in Gujarat.
As per the reports, the factory in Sanad will be kept by Ford, whereas the Chennai plant will be transferred to the new JV with Mahindra.
As of now, Ford manufactures 440,000 cars a year in India. They have invested close to $2 billion in India till now.
Ford will continue to make and sell cars in India, but that will be part of the JV, and not Ford directly.
What Is The Reason For This?
Ford has just 3% market share in India, as it is battling to fight the dominance of Maruti, Tata, Honda and other leading car manufacturers.
On the other hand, Ford has been fighting slowdown in sales, and a massive dip in profits since last 12 months.
They have initiated a major global restructuring process, which has been created to save upto $11 billion per year.
As part of this ‘restructuring plan’, around 10% or 7000 full-time employees of Ford will be asked to leave their jobs, all over the globe.
It is being believed that the decision to end operations in India is part of this initiative.
We will keep you updated, as more details come in.
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