Ford has announced that it will be winding down its operations at its Indian-based Sanand and Chennai plants. The American manufacturer confirms that this does not mean the end of its relationship with India as it will significantly expand its Chennai-based Ford business solutions team.
The Indian-arm will cease manufacturing vehicles that cater to its local market with immediate effect. 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. Included in this product line-up that is relevant to SA are the Ford EcoSport and Figo. This restructure is set to affect approximately 4 000 employees.
“As 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. “Despite investing significantly in India, Ford has accumulated more than $2 billion (approximately R28 billion) of operating losses over the past 10 years and demand for new vehicles has been much weaker than forecast.”
Following accumulated operating losses of more than $2 billion over the past 10 years and a $0,8 billion (approximately R11,3 billion) non-operating write-down of assets in 2019, the restructuring is expected to create a sustainably profitable business in India.
The division 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.
“Despite these efforts, we have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing,” Anurag Mehrotra, president and managing director of Ford India said. “The decision was reinforced by years of accumulated losses, persistent industry overcapacity and lack of expected growth in India’s car market.”
Ford South Africa is yet to comment on how the closure of these two plants will affect our local line-up.