Ford India Pvt Ltd. will cease its production of vehicles as a consequence of scaled up losses.

Ford India Private Limited will be shutting its manufacturing factory in India as a consequence of scaled-up losses of around $2 billion in restructuring India operations, and a downfall in the passenger vehicle market, which was further aggravated by the pandemic. The company holds 2% of the market share. Over 4,000 employees are likely to be concerned about this decision. This came to the spotlight when the Managing Director of Ford India, Anurag Mehrotra, shared the scenario with the reporters in a virtual press release that took place on September 9, 2021. 

$2 billion loss moves Ford to cease its vehicles manufacturing unit in India, 4000 staff will be affected
$2 billion loss moves Ford to cease its vehicles manufacturing unit in India, 4000 staff will be affected

The car-making company will wind up its manufacturing operations till next year, closing down both of its plants in Gujarat as well as Chennai. According to a Reuters report, the company came to the conclusion of ceasing its manufacturing operations as it was not beneficial for it to continue.

However, Ford is not taking a complete off from the Indian market. It will be selling some of its products through imports which will affect our country’s Make-in-India programme, aiming and encouraging to manufacture products and services locally instead of importing foreign goods. 

Mehrotra said, “I would like to reiterate, we are not exiting India. This is restructuring for our business.” Reportedly, this decision of the company will affect around 4,000 workers or employees. 

The company is the most recent and third global US automaker after General Motors and Harley Davidson to quit the Indian market so remarkably amid magnified operating losses of $2 billion, despite investing appreciably to conform to the expectations of exponential growth. 

Mehrotra expressed, “The decision was reinforced by years of accumulated losses, persistent industry overcapacity and lack of expected growth in India’s car market.” “We have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing,” he added.

Planning for the restructuring and sustainability in India, Ford Motor’s President and CEO, Jim Farley said, “As part of our Ford+ plan, we are taking difficult but necessary actions to deliver a sustainable profitable business longer-term and allocate our capital to grow and create values in the right areas.” Taking this plan into consideration, the US car-making company will shut down its plant in Gujarat by the fourth quarter this year and the vehicle and engine manufacturing plant in Chennai by the second quarter of next year. 

Mehrotra shared that the company will be selling some of its cars through imports including Mustang Mach-E. The company announced that its charges of $2 billion include non-cash charges worth $0.3 billion which the establishment bears out of depreciation and amortization. The unsettled $0.7 billion will be paid in 2022.