India has announced that it will cease manufacturing vehicles for sale in India
immediately. The manufacturing of vehicles for export will wind down at Sanand
vehicle assembly plant by Q4 2021, and Chennai engine and vehicle assembly
plants by Q2 2022.
Sales of current products such as Figo, Aspire, Freestyle,
EcoSport and Endeavour will cease once existing dealer inventories are sold.
accumulated operating losses of more than $2 billion over the past 10 years and
a $0.8 billion non-operating write-down of assets in 2019, the restructuring is
expected to create a sustainably profitable business in India.
a press statement the US based company said that it will work closely with
employees, unions, dealers and suppliers to care for those directly impacted.
The company said it will serve customers in India with vehicles like the
Mustang coupe. Customers in India also will benefit longer term from the
Company’s plan to invest more than US$30 billion globally to deliver all-new
hybrid and fully electric vehicles, such as Mustang Mach-E.
said that India will remain home to Ford’s second-largest salaried workforce
globally. In addition to Ford Business Solutions, Ford India will continue
engine manufacturing for export, as well as full customer support operations
with service, aftermarket parts and warranty support. More than 500 employees
at the Sanand Engine plant, which produces engines for export for the
best-selling Ranger pickup truck, and about 100 employees supporting parts
distribution and customer service, also will continue to support Ford’s
business in India.
plans to significantly expand its 11,000-employee Business Solutions team in
India in coming years to support Ford globally; team to focus on engineering,
technology, and business operations centres of excellence.
India’s restructuring will advance the Ford+ plan for growth and value creation
by strengthening automotive operations and capitalizing on unprecedented
opportunities in electric and connected vehicles and enhanced customer
Business Solutions plans to expand to provide more opportunities for software
developers, data scientists, R&D engineers, and finance and accounting
professionals, in support of the Ford+ plan to transform and modernize Ford globally.
Ford’s plans for India
will begin importing and selling must-have, iconic vehicles, including Mustang
coupe. Customers in India also will benefit longer term from the company’s plan
to invest more than $30 billion globally to deliver all-new hybrid and fully
electric vehicles, such as Mustang Mach-E.
will continue full customer support operations for these vehicles with service,
aftermarket parts and warranty coverage.
part of our Ford+ plan, we are taking difficult but necessary actions to
deliver a sustainably profitable business longer-term and allocate our capital
to grow and create value in the right areas,” said Jim Farley, Ford Motor
Company’s president and CEO.
investing significantly in India, Ford has accumulated more than $2 billion of
operating losses over the past 10 years and demand for new vehicles has been
much weaker than forecast. 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. India remains
strategically important for us and, thanks to our growing Ford Business
Solutions team, will continue to be a large and important employee base for
Ford globally”, he added.
Mehrotra, president and managing director of Ford India, added: “Ford has a
long and proud history in India. We are committed to taking care of our
customers and working closely with employees, unions, dealers and suppliers to
care for those affected by the restructuring.”
India said it took these restructuring actions after investigating several
options, including partnerships, platform sharing, contract manufacturing with
other OEMs, and the possibility of selling its manufacturing plants, which is
still under consideration.
these efforts, we have not been able to find a sustainable path forward to
long-term profitability that includes in-country vehicle manufacturing,”
Mehrotra said. “The decision was reinforced by years of accumulated losses,
persistent industry overcapacity and lack of expected growth in India’s car
market,” he noted.
4,000 employees are expected to be affected by the restructuring. Ford will
work closely with employees, unions, suppliers, dealers, government, and other
stakeholders in Chennai and Sanand to develop a fair and balanced plan to
mitigate the effects of the decision.
India will maintain parts depots in Delhi, Chennai, Mumbai, Sanand and Kolkata
and will work closely with its dealer network to restructure and help
facilitate their transition from sales and service to parts and service
India will maintain a smaller network of suppliers to support engine
manufacturing for exports and will work closely with other suppliers to ensure
a smooth wind-down of vehicle manufacturing. Ford also will continue to rely on
India-based suppliers for parts for its global products, and suppliers and
vendors supporting Ford Business Solutions will continue to support the
business as normal.
connection with this announcement, Ford currently expects to record pre-tax
special item charges of about $2.0 billion, including about $0.6 billion in
2021, about $1.2 billion in 2022 and the balance in subsequent years. Within
that total will be about $0.3 billion of non-cash charges, including
accelerated depreciation and amortization. The remaining cash charges of about
$1.7 billion will be paid primarily in 2022 and are attributable to settlements
and other payments.
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