The American automaker took a $2 billion hit before deciding to stop manufacturing cars in India. Ford will shut its plant in Chennai and Sanand down. The billion dollar MNC came to India in the mid 90’s following the 1991 economic reforms. The Indian market appealed to Ford Motor Co mainly because of its huge size and government’s policies. The economic reforms of 1991 allowed foreign companies to compete in the Indian market. Money in form of FII’s and FDI’s flowed in the economy.
At that time the disposable income of India’s middle class was also rising. This gave Ford an additional incentive to set up plants in India and so it did. However, things did not go as planned and the company announced its retreat on September 9, 2021. In October 2019, Ford and Mahindra entered into a joint venture to survive in the Indian market but even that didn’t favor the American carmakers. The firms separated by the end of 2020.
Reasons for Ford’s failure in India:
Let us now take a brief look at some of the reasons due to which Ford had to pull out of the Indian market:
Lack of products aimed at every segment of the Indian market is one of the most prominent reason for Ford’s failure here. Moreover, the company’s exports from India were also very minimal.
The company sold just 48,042 units in the FY 2020-21 as opposed to its competitor in the India market Maruti Suzuki, which sold about 1.1 million units.
The strict emission norms that the government of India introduced needed enormous investments which Ford could not afford given its financial situation in India.
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