Ford Motor Co. will shut its car factories in India and record roughly US$2 billion in restructuring charges, scaling back significantly in a country that past management saw becoming one of its three biggest markets.
Manufacturing of vehicles for sale in India will stop immediately, and about 4,000 employees will be affected, the carmaker said in a statement Thursday. Ford will wind down an assembly plant in the western state of Gujarat by the fourth quarter, as well as vehicle and engine manufacturing plants in the southern city of Chennai by the second quarter of next year.
Ford’s moves come months after it dropped a plan to cede most of its Indian operations to local sport utility vehicle maker Mahindra & Mahindra Ltd. Ford India racked up more than US$2 billion in losses during the past decade and wrote down the value of its business by about US$800 million in 2019.
Foreign automakers have found it difficult to gain a foothold in the value-conscious Indian market dominated by Maruti Suzuki India Ltd.’s cheap cars. The government’s high tax regime, which imposes levies as high as 28 per cent on gasoline vehicles, has also been a major roadblock. Toyota Motor Corp. last year said it won’t expand further in India due to high tariffs, while Harley-Davidson Inc. has exited the market. General Motors Co. pulled out in 2017.
Ford India had a market share of just 1.42 per cent in August, compared with 1.9 per cent a year ago, data from Federation of Automobile Dealers Associations showed. The local units of Japan’s Suzuki Motor Corp. and South Korea’s Hyundai Motor Co. together control more than 60 per cent of the market.
Ford was one of the first global car companies to enter India when the economy opened up in the early 1990s.
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