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Ford Motor | Photo: Reuters
Ford Motor Company, after stopping operations in India in 2021, is making a return to the country’s automotive scene. The American automaker has signed a letter of intent (LoI) with the Tamil Nadu government to explore resuming manufacturing at its Chennai plant, primarily for exporting vehicles to global markets. This marks a significant shift as the company focuses on using India as a hub for exports rather than for domestic sales, which had been dwindling before its exit.
Ford’s plans to revive Chennai mfg plant
The US automaker plans to restart production at its Chennai facility, located in Maraimalai Nagar, roughly 50 km from Chennai. This move comes two years after Ford ceased operations at the site in 2022. The manufacturing unit, spread over 350 acres, previously produced models like the Ford EcoSport and Ford Endeavour, and exported vehicles to 37 countries.
The company’s leadership, including key executives from its global operations, recently met with Tamil Nadu Chief Minister M K Stalin during a visit to the United States. The discussions centred around reviving operations at the Chennai facility, which has an annual capacity of 200,000 vehicles and 340,000 engines.
Further details, including the exact type of vehicles to be manufactured and the markets they will serve, are expected to be revealed in due course. The Tamil Nadu government has been supportive of this move, seeing it as an opportunity to bolster the state’s automotive sector.
Ford’s decision to restart operations in India, albeit with a different focus, comes after a rocky few years in the Indian market. The company initially entered India in 1995 in a joint venture with Mahindra & Mahindra, but despite introducing popular models like the Ford Figo and EcoSport, Ford struggled to capture significant market share. In September 2021, the company announced its decision to exit the Indian market, citing sustained losses.
A complete timeline of Ford in India
1926: Ford Motor Company began its first operations in India as a subsidiary of Ford Motor Company of Canada.
1953: The original Ford India company was liquidated due to stringent import restrictions.
1995: Ford re-entered the Indian market through a joint venture with Mahindra & Mahindra, forming Mahindra Ford India Ltd, with Ford holding a 50 per cent stake.
1996: The company launched its first vehicle, the Ford Escort sedan, marking its return to Indian automobile manufacturing.
1998: Ford increased its stake in the joint venture to 72 per cent and renamed the company Ford India Pvt Ltd.
2003: Ford launched its first SUV in India, the Ford Endeavour, based on the Ford Ranger pickup truck.
2010: The launch of the Ford Figo marked the company’s significant foray into the compact car segment, which was well-received in the Indian market.
2013: The Ford EcoSport, a compact SUV, was introduced, becoming a game-changer for the company in India, especially with its success in both domestic and export markets.
2019: Ford entered into a joint venture with Mahindra & Mahindra to share technology and resources, aiming for cost efficiency in India’s competitive market.
2020: The Ford-Mahindra joint venture was dissolved, and Ford announced its decision to go solo in India, but sales continued to struggle.
September 2021: Ford announced its exit from the Indian domestic car market, ending production for local sales due to sustained financial losses.
February 2022: Ford briefly re-entered India by bagging incentives under the production-linked incentive (PLI) scheme for electric vehicles but soon reversed its decision in May 2022.
August 2022: Ford sold its Sanand manufacturing plant in Gujarat to Tata Motors for Rs 7.26 billion (approximately US$91.5 million).
September 2022: Ford closed its remaining operations in India, including the Maraimalai Nagar plant near Chennai.
September 2023: Ford signed a letter of intent with the Tamil Nadu government to explore restarting manufacturing at its Chennai plant, primarily for exports to global markets, marking a potential re-entry into the Indian market focused on exports.
September 13, 2024: Ford announces re-entry into India with plans to restart work at the Chennai plant to manufacture cars, initially for exports.
Ford’s success and challenges in India
Although Ford’s early models like the Ikon and Fiesta were well-received, it was the EcoSport that truly put Ford on the map in India. The compact SUV became a favourite in the country, and its sub-4-metre size allowed Ford to benefit from tax breaks for smaller cars. Ford exported this model to multiple global markets, further cementing the importance of its Indian operations.
Ford’s renewed interest in the Indian automotive scene may be driven by its broader global strategy. Media reports indicate that its presence in China is shrinking due to intense competition from local manufacturers, Ford is looking to strengthen its position in other regions, such as Australia, New Zealand, and West Asia. By converting the Chennai facility into an export hub, Ford aims to leverage India’s relatively low production costs and strategic location for exports.
Advantages of Chennai mfg plant for Ford
Maraimalai Nagar offers significant logistical advantages for Ford. It is well-connected to major ports, with Chennai port just 50 kilometres away and Ennore port 74 kilometres distant. This makes it easier for Ford to ship its vehicles to international markets, particularly as the company plans to double down on exports in regions like Saudi Arabia, the UAE, and Australia.
The plant itself, which saw an investment of approximately $1 billion, was once a key player in Ford’s global export operations. Its proximity to vital transportation routes and its capacity for large-scale production make it an ideal location for the automaker’s future endeavours.
First Published: Sep 16 2024 | 11:06 AM IST
