Over the past decade, Ford has had quite a forgettable stint in the Indian market. So much so that the company has decided to make some radical changes. What can only be termed as bad news for existing customers and dealers, Ford India will stop making vehicles in India. The assembly plant in Sanand will go idle by the fourth quarter of 2021. And as for the engine manufacturing facility in Chennai, that’ll be winded down by the second quarter of 2022. That said, Ford is not exiting India. More on that in a bit. First, let’s address the obvious questions.

What’s next for existing Ford customers?

The company says it will stand by them. It will provide customers in India with spare parts, service and warranty support. It will maintain parts depots in Delhi, Chennai, Mumbai, Sanand and Kolkata. The sales of current models – Figo, Aspire, Freestyle, EcoSport and Endeavour – will come to a cease as soon as dealer inventories dry out. However, customer support for all those vehicles will be provided.

Why has Ford taken this step?

As mentioned above, Ford India has a troubled time. Over the past 10 years, it has accumulated losses of more than USD 2 Billion. Additionally, it saw a USD 0.8 Billion non-operating write-down of assets in 2019. These numbers came from a much weaker than anticipated demand for new vehicles. Unless there’s a way to make it sustainable, no business can last for too long with such massive losses.

Ford Mustang Mach E

Okay, what now for Ford India?

The name isn’t going anywhere. The new strategy will bring global products, such as the Mustang Coupe, to the Indian market. India will also see the introduction of Ford’s electrified SUVs. And yes, they will be direct imports and will attract colossal tax duties. Also, the parent company will shift focus on growing its Ford Business Solutions capabilities and team in India. The engineering and engine manufacturing units will serve export markets. India has Ford’s second-largest workforce, with a count north of 11,000. The company aims to provide them with more opportunities in streams such as software development, R&D and finance and accounting. The idea is to uplift the Indian team to support the Ford+ plan – modernising the brand globally.

Did Ford explore all options before drawing the new plan?

As a matter of fact, yes. It investigated various options, including partnerships, platform sharing and contract manufacturing with other OEMs. In addition, it is still exploring the possibility to sell its manufacturing facilities in India.

Ford India explored collaborating with Mahindra. It would have benefitted, at least in theory, both players. But, unfortunately, that didn’t work out, and despite a long list of projects planned, the partnership tanked before it could bear fruit.

What about dealers and other employees?

It’ll help the dealer network restructure and facilitate their transition from sales and service to parts and service support. In addition, Ford India will maintain a smaller network of suppliers to support engine manufacturing for international markets. Also, it’ll rely on India-based suppliers for parts for its global products.

Ford says that about 4,000 employees are expected to be impacted by the new India business model. It’ll work with them, including unions, suppliers, dealers and other stakeholders, in Chennai and Sanand, to develop a plan that mitigates the effects of the decision.