Two years after announcing its exit from the Indian market, Ford Motor Company is reconsidering its decision, according to sources familiar with the matter. The American automaker, which had been in talks with JSW Group for the sale of its Chennai plant, has now put those plans on hold indefinitely.
“Ford is rethinking whether it wants to leave India, one of the world’s fastest-growing auto markets,” revealed one of the sources.
A spokesperson for Ford India stated, “We continue to explore alternatives for our manufacturing facility in Chennai and have nothing further to share on the speculations.”
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The JSW Deal and Ford’s Troubles
The collapse of talks with the JSW Group comes as a setback for Ford, which had been making strides towards finalizing the deal. However, sources suggest that Ford’s sudden change of heart may stem from a desire to maintain a manufacturing presence in India.
The JSW Group, known for its recent collaboration with MG Motor India and China’s SAIC Group, had entered the automotive business. This further complicated matters for Ford, as it was also eyeing a deal with the group.
Ford’s Rollercoaster Journey in India
In 2021, Ford initially announced its intention to exit the Indian market following a challenging period. Despite investing over $2 billion, the company faced significant losses. However, in early 2022, Ford won benefits under the Production-linked Incentive (PLI) scheme for electric vehicles.
Subsequently, the company decided to exit its manufacturing setup in India, retaining only a token presence through certain imported premium models. The Sanand plant in Gujarat was sold to Tata Motors, with the acquisition being finalized in early 2023.
Chennai Plant Sale on Hold
Ford’s Chennai facility, sprawling across 350 acres with an annual capacity of 150,000 cars and nearly 340,000 engines, has been inactive since July 2022. The potential sale to a Vietnamese electric vehicle maker is also part of the ongoing negotiations.
The spokesperson for Ford India emphasized that the company is still evaluating its options and has not made a final decision on whether to return to manufacturing in India.
Ford’s Presence in India
Having entered India through a joint venture with Mahindra and Mahindra (M&M), Ford accumulated over $2 billion in operating losses over a decade. Since 2021, Ford India has shifted its focus to supporting a service network, importing and distributing automotive parts, and selling extended warranties.
Among Ford India’s top-selling models were the Figo hatchback, Figo Aspire sedan, Endeavour SUV, and the EcoSport compact SUV. The EcoSport, in particular, was the last model to roll off the production line.
Ford’s reconsideration of its exit strategy from India suggests a potential shift in its plans. The automotive giant is carefully evaluating its options, and the outcome remains uncertain as discussions continue. The dynamic landscape of the Indian auto market may see Ford taking a different course than initially anticipated.
