Ford Motor
Company has decided to exit from the Indian automotive industry and cease the
production of cars in its manufacturing units located at Maraimalai Nagar and
Sanand. Ford will stop manufacturing the vehicle for export purposes in Sanand,
Gujarat by the fourth quarter of FY2021 as well as engine and vehicle
manufacturing in Maraimalai Nagar, Chennai by the second quarter of FY2022.
Ford Motor Company sells five models in India - Freestyle, EcoSport,
Aspire, Figo, and Endeavour. Its exit is expected to put a
massive dent in the Indian automotive industry. Before Ford, two other US-based
automaker Harley Davidson and GM, have exited the India due to low sales and
profit margins in the past. The sale of all the present current car models will
stop after the dealer’s stock gets over.
The accumulation
of more than $2 billion operational losses in the past 10 years, and a $0.8 billion
non-operating write-down assets of 2019 alone, the American automobile company
is forced to exit from the Indian market. Ford’s production capacity dropped
down to 25% of total capacity and incurred huge losses, which is one of the
main reasons for the company’s exit from the country. The partnership deal with
Mahindra & Mahindra was not successful which adversely affected the market
position of the country.
“The move is
anticipated to adversely impact the 4,000 employees working in Ford Motor
Company directly and around 170 dealers who had already made investments of
around ₹2,000 crores and employed 40,000 people and have around 391 outlets”,
said Federation of Automobile Dealers Associations (FADA). The automotive
company is expected to take a hit of around $2 billion and blamed the decision
of moving out from the country due to lack of profitability. Ford company
struggled to gain more customers of the passenger vehicle and holds less than
2% of the market share. “The decision was reinforced by years of
accumulated losses, persistent industry overcapacity and lack of expected
growth in India’s car market," said Anurag Mehrotra, President and MD at
Ford India.
The Ford Motor
Company has promised to provide the customers with the availability of
aftermarket parts and warranty support services by the company. Ford company
will continue operating from select outlets in India to maintain its presence
in India. The automaker company is going to sell its most exclusive cars, like,
Mustang Coupe, Mustang Mach-E electric through the import route. The company is
planning to expand the business in India, by exporting the CBU and CKU units
rather than indigenously manufacturing the vehicle. Ford is going to deliver
electric and hybrid vehicles and will work closely with its dealer networks to
ensure maximum consumer satisfaction and efficient aftersales service.
Lakhs of people
rely on the service and quality of prestigious company Ford and the concerned
officials have stated that they would try and provide the best customer support
operation to maintain the confidence and trust customers have showered for the
last 25 years. Jam Farley, President, and CEO at Ford Motor Company emphasized
the fact that customers are their utmost priority and stated, “I want to be
clear that Ford will continue taking care of our valued customers in India,
working closely with Ford India’s dealers, all of whom have supported the
company for a long time."
With the entry
of new players in India such as MG Motor and Kia Motor, and the aim to achieve
the BS-VI norms, the sales of Ford Motor Company were put in a tight spot. With
the shortage of the global semiconductor market and the occurrence of the
COVID-19 pandemic, the Ford Motor Company was left with no choice but to leave
the automotive industry of India. Ford’s decision is also expected to negatively
impact the “Make in India” campaign, and it follows the exit decision of other
renowned automotive industry players in India like Harley Davidson, Man Trucks,
UM Lohia, and General Motors.

Ford’s Position in Indian Passenger
Car Market
0India
passenger car market registered 2.71 million sales in FY2021, down from 2.77
million sales in FY2020. Reason for slight drop in sales can be attributed to
backlog & long pending orders due to shortage of semiconductor and fear of
COVID-19 third wave. In FY2021, Ford
captured 1.77% share of passenger car market which converted to 48.04 thousand sold
units.
However, in
FY2022, market share of Ford further dropped. In August 2021, the company sold
1508 cars in comparison to 4731 sold in August 2020, making its market share
close to 0.6% in August, 2021.
According to Techsci Research on “India Passenger Car Market By Vehicle Type (Hatchback, Sedan,
SUV and MPV), By Fuel Type (Petrol and Diesel), By Transmission Type (Automatic
and Manual), By Engine Capacity Type (<1000, 1000-1500, 1500-2000 and
>2000), By Segment Type (Mini, Compact, Micro, C1, C2, D, E and F), By
Region, Competition, Forecast & Opportunities, 2026”, the passenger car market in India is
projected to grow at a CAGR of over 10% in the next five years. Increasing
disposable income and growing number of low-priced car models are anticipated
to fuel the growth of the market through FY2026.

Following
departure of Ford from the automotive industry, it would be interesting to see
which automaker benefits and captures the market share:
· Ford EcoSport:
The Ford EcoSport is one of most selling compact SUVs of Ford,
registering sales of 27181 units in 2020. The SUV is available in a variety of
engine-transmission combinations. Major competitior of Ford EcoSport in the Indian
automotive market are Hyundai Venue, Maruti Vitara Brezza, Kia Sonet, Tata
Nexon, Mahindra XUV300, Nissan Magnite, Renault Kiger, and Toyota Urban Cruiser.
In comparison of sales Maruti Vitara Brezza, Tata Nexon and Mahindra XUV300 are
expected to benefit most from the departure of Ford EcoSport. All three models
registered growth of over 85% in August 2021 in comparison to August 2020. Due
to wider service network and more powerful engine, Tata Nexon is expected to witness
increased sales in the upcoming months.

Following Tata Nexon, Maruti Vitara Brezza is expected to benefit
most from the departure of Ford. Brezza is already the largest best-selling
compact SUV in August even when it is available with a petrol engine variant only. Maruti Vitara Brezza has sold 12906 in August 2021 which is 87%
high from August 2020. Maruti Vitara Brezza consists of 1.5-litre K15 engine
that can produce 103 bhp and 138Nm of peak torque. It also offers innovative
features such as steering-mounted controls, automatic headlamps, Smartplay
studio, Apple CarPlay, key-less entry, and automatic climate control system,
among others which ensures maximum comfort and protection of customers.
· Ford Figo:
The Ford Figo is available in four petrol a