Ford Motor Co. is shutting down its car factories in India and will exit the country amid mounting losses as it has failed to keep pace with nimbler rivals in a highly competitive market.
Ford India has piled up losses of more than $2 billion during the past decade and wrote down the value of its business by about $800 million in 2019.
Manufacturing of vehicles for sale in India will stop immediately, and about 4,000 employees will be affected, For Motor said in a statement on Thursday.
The company will wind down its assembly plant in Gujarat that exports cars by the fourth quarter of the current financial year, as well as a vehicle and engine manufacturing plants in Chennai by the second quarter of next year.
Following the factory closures, Ford will import and sell some vehicles, including Mustang coupes, but the sale of models including the Figo, EcoSport and Endeavour will cease once existing inventory at dealers is sold.
“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, managing director of Ford India. “We have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing."
Ford India will restructure its operations with plans to significantly expand its Chennai-based Ford Business Solutions team and bring to market some of Ford’s iconic global vehicles and electrified SUVs while ceasing vehicle manufacturing in India," the company said in a statement.
Ford was one of the first global car companies to enter India when the economy opened up in the early 1990s.
Ford considered several options, including partnerships, platform sharing and contract manufacturing with other carmakers before deciding to shut down factories in India. It is still considering the possibility of selling its manufacturing plants in the country.
Ford India has an installed manufacturing capacity of 610,000 engines and 440,000 vehicles a year. It also exported its models such as Figo, Aspire, and EcoSport to over 70 markets around the world.
In January this year Ford and Mahindra & Mahindra had decided to scrap their previously announced automotive joint venture and instead chose to continue independent operations in India.
In October 2019, the two companies had announced an agreement under which Mahindra & Mahindra would acquire a majority stake in a wholly-owned arm of Ford Motor Co that will take over the automotive business of the US auto major in India.
Ford is the second American auto major after General Motors to shut plants in India.
In 2017 General Motors announced that it would stop selling vehicles in India as there it continued to make losses.
