Ford Could Shut Down India Operations; Talks On With Ola For Contract Manufacturing

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Choosing a partner for its India operations, Ford has come into the limelight. After the dissolution of its partnership with Mahindra & Mahindra, Ford is on the lookout for a new partner for contract manufacturing. There have been reports that Ford is in talks with other brands for the same. Earlier it was said that MG is planning to partner up, but that plan dropped. The recent reports state that Ford is in talks with the French Automaker Citroen for contract manufacturing or sale of their factories.

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But now, TOI has reported that Ford India could follow General Motors’ suit and could exit India, selling both of its factories to Ola.

Ford India lineup

Reports say that Ola could use Ford’s factories to build electric cars. Ola has refused to comment on speculations, the report said. Ford has two plants in India. One in Maraimalainagar in Tamil Nadu and one in Sanand, Gujarat.  The Chennai plant has an annual production capacity of 2 Lakh vehicles and 3.40 Lakh engines. Ford’s SUVs, EcoSport and Endeavour, roll out of this plant, in which the company has invested more than $1 billion.

The company has spent over $1 billion on the Sanand factory, which is spread over 460 acres. This factory has an annual installed production capacity of 2.40 lakh vehicles and 2.70 lakh engines. Ford is planning to pack things up in India hence the negotiation talks with various companies. The main reason for this is the decline in sales of its popular SUV Ecosport. Because of the second wave of the pandemic, domestic sales have dwindled. The domestic automobile industry’s sales volume declined 65 percent month-on-month(MoM) in May 2021 despite a lower base, following a 30 percent MoM fall in April 2021, which was also impacted by lockdowns, albeit in the key states and towards the latter part of the month.

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Many auto original equipment manufacturers (OEMs) and auto and auto ancillaries resorted to planting shutdowns as a restrictive measure. The automotive dealerships across regions have also not been operational in light of regional restrictions imposed by various states and local authorities to curb the pandemic it said.

“The uncertainty in the long-term growth prospects of the auto industry has resulted in serious challenges for Ford, including capacity utilization,” said a source.

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