American multinational automobile manufacturer Ford has announced that it will cease production in India following Asian rivalry in the market and it does not see any way to profit in the country.
After the exit of general motors (GM) and Harley-Davidson, Ford with a presence since 1995, has ended 2020-21 selling 48,042 units to garner a 1.8 percent share of the market. Ford claimed in a statement that it has lost more than $2 billion in operational losses in India over the last ten years and demand for its new vehicles has been weak.
By the fourth quarter of next year, Ford will close an assembly factory in the western state of Gujarat, as well as car and engine manufacturing operations in the southern city of Chennai affecting around 4,000 employees.
Jim Farley CEO – Ford
“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.”
The company stated that it will no longer invest in marginal markets that yield little or no profit. Earlier this year, Ford said that it would halt more than a century of manufacturing in Brazil and issued a $4.1 billion charge. Instead, they are focusing on China, the world’s largest auto market, where Ford’s Lincoln luxury line is currently selling more cars than it is in the US.
Ford stated in a filing that the restructuring charge will be spread out over several years, with $600 million booked this year, $1.2 billion in 2022, and the rest in later years. The automaker said it expects global restructuring charges of $2.2 billion to $2.7 billion this year, before interest and taxes.
The company said the decision to cease production was made after considering several other options including partnerships, platform sharing, contract manufacturing and the possibility of selling its manufacturing plants, which is still under review.
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