2021 Auto News

US auto major Ford may shut down India operations: Report

Credits: www.freepressjournal.in

Ford may shut down its operations in India soon. The carmaker may wind up operations in its two factories in India — Maraimalainagar in Tamil Nadu and Sanand in Gujarat, according to news reports.

The US-based auto major is likely in talks with various car firms for either contract manufacturing or sale of its Indian factories or both, according to a report in The Economic Times. One of the companies it is in talks with is Ola which could use Ford’s factories to build electric cars. Ola has refused to comment on speculations, the report said.

Ford sells vehicles like Figo, Freestyle, Aspire, EcoSport, Endeavour and Mustang in India.

In January 2021, Ford and Mahindra & Mahindra (M&M) announced they had decided to scrap a previously announced automotive joint venture, citing changes in global economic and business conditions partly due to the coronavirus pandemic.

The outcome was driven by fundamental changes in global economic and business conditions caused, in part, by the global pandemic. Those changes influenced separate decisions by Ford and Mahindra to re-assess their respective capital allocation priorities.

In October 2019, the two companies announced an agreement under which Mahindra & Mahindra would acquire majority stake in wholly-owned arm of Ford Motor Co (FMC) that will take over the automotive business of the US auto major in India

The new entity was to develop, market and distribute Ford brand vehicles in India while also selling both Mahindra and Ford cars in the high-growth emerging markets.

Domestic auto sales decline

The domestic automobile industry’s sales volume declined 65 percent month-on-month(MoM) in May 2021 despite of 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.

“The PV and two-wheeler sales declined by 66 percent and 65 percent MoM, respectively, in May 2021,” Ind-Ra said.

The second wave of the pandemic in India has derailed the recovery momentum of the domestic auto industry, which was poised for a comeback in the current fiscal after witnessing the two consecutive challenging years, ratings agency ICRA had said.

Unlike the first wave where infections were largely localised to urban clusters, the second wave has seen deeper and wider penetration, including into rural hinterlands. Accordingly, outlook for various segments has been revised downwards, it said.