Ford stops manufacturing cars in India: What went wrong for the American company?

After 25 years, Ford has shut down operations in India leaving several dealers and employees in a soup. Earlier, Ford had factories in Sanand (Gujarat) and Chennai (Tamil Nadu) which employed close to 4000 people. Now, the factory in Sanand will have only 500 employees who will produce engines for export.

Experts suggest that the company was unable to read the Indian market correctly. They did not customize their cars according to Indian needs and relied on the same models that worked abroad. In FY 2020 and FY 2021, they sold just 66000 and 48000 units respectively. Because of these reasons, their losses over the last 10 years amounted to $2 billion.

In an interview with IANS, an industry expert who chose to be anonymous said, “Their initial attitude towards the Indian market was something like this - you ate the pizza and burger that were launched. So, drive the model we offer. But the pizza and burger companies Indianised their products while the American car makers didn't do that.”


It's not just Ford which is suffering. In the last few years, passenger vehicle sales have plummeted. As many as 3.37 million units were sold in 2018-2019. In 2021, those figures have come down to 2.71 million units.


According to FADA (Federation of Automobile Dealers Associations), there are 170 Ford dealers in India who own 391 outlets. With the ban, a lot of them have been left stranded and confused. “These decisions are not taken overnight. Till five months back, Ford was appointing new dealers. There were discussions with dealers over ‘upcoming’ EcoSport facelift bookings around 4-5 days back. They allowed these bookings based on pictures. The customers and the dealers have been fooled,” FADA CEO Saharsh Damani told The Indian Express.


For a long time, the small car market in the country has been the biggest. Maruti Suzuki and Hyundai understood this and produced cars catering to that market. Considering Ford’s market share was not significant, their exit will not necessarily result in a windfall for these companies. Before Ford, American organizations like General Motors and Harley Davidson too have shut down operations in the country.


Despite not producing new cars, Ford India will continue to help its existing customers. In a video message, Ford India head Anurag Mehrotra said, “Ford has a long and proud history and over a million customers in India. I want to be clear that we are not leaving and will continue to take care of you like family. We will be working closely with our dealers, all of whom have supported Ford for long, to ensure accessibility of service and spare parts, quality of service with a ‘family-wali feeling’, competitive cost of ownership, and honouring of our warranty promise.”


Hopefully, Ford’s mistakes will serve as a lesson for any foreign auto manufacturer entering India. Ignoring customer preferences and imposing your own model is never feasible in the long run.


References:


1. Ford's India exit: What went wrong and who would benefit from it (HT Auto)

2. Ford Stops Making Cars In India, The Third U.S. Vehicle Maker To Exit (Forbes)

3. What went wrong with Ford in India and who will benefit from its exit? (ET Auto)