Auto & Transportation

Ford is a world-renowned automobile manufacturer and an American brand. It has its own manufacturing plants around the world. One of the countries is India. India has only built a factory for 10 years. According to the latest news, Ford has terminated its car manufacturing business in India. .

Recently, Ford Motor of the United States will stop producing cars in India and will close two of its factories in India. Ford said in a statement that the Indian market has been weak in demand for Ford's new cars.

Prior to this, General Motors had just withdrawn from the Indian market in January this year. At that time, General Motors President Stephen Jacobs issued a statement saying that GM will withdraw from the Indian market within the year because it cannot obtain benefits in accordance with the investment in India.

Following General Motors, Ford Motor also plans to terminate its car manufacturing operations in India and carry out a Ford+ transformation.

In the past ten years, Ford's business in India has lost more than US$2 billion (approximately RMB 12.9 billion). This is the main reason for the plant closure and transformation. Because sales of the flagship model EcoSport have been declining, Ford's market share in India has dropped from more than 3% to about 2%.

Ford has two car production plants in India, Chennai and Sanand, which employ thousands of employees.

The Chennai plant occupies an area of 350 acres and has an annual output of 200,000 cars and 340,000 engines. Ford's SUV, EcoSport and Endeavour are all produced in this plant. Chennai will stop production in the second quarter of 2022.

Ford spent more than $1 billion on the Sanand plant, which covers an area of 460 acres and has an annual production capacity of 240,000 cars and 270,000 engines. This factory produces compact car Aspire and hatchback new-generation Figo. The engine integration business at the Sanand plant will cease production before the end of the year.

The company said that cars sold in India will immediately stop production, and approximately 4,000 employees will be affected. Ford expects to include approximately $2 billion in expenses related to the restructuring.

Ford realizes that it is no longer profitable to continue operating in India, and the entire exit process will take about a year. The company will continue to import some of the cars sold in India, provide support to local dealers, and serve the remaining customers.

In 2019, it made a profit of 84 million U.S. dollars, but for the whole of 2020, due to its global restructuring plan and the impact of the epidemic, Ford lost 1.28 billion U.S. dollars. This is the first annual loss since 2008; revenue in 2020 was 127.1 billion U.S. dollars, a year-on-year decrease of 18 %.

In contrast, Ford’s data in China last year was not bad. In 2020, Ford’s cumulative sales in China were 602,600, a year-on-year increase of 6.1%. This is the company’s first sales growth since 2017.

On July 29 this year, Ford Motor announced its second-quarter 2021 financial report, showing that Ford Motor’s second-quarter revenue was 26.8 billion U.S. dollars, an increase of 38% year-on-year; net profit was 600 million U.S. dollars, a year-on-year decrease of 45%; net profit margin was 2.1 %, 5.8% in the same period last year; diluted earnings per share was $0.14, a year-on-year decrease of 50%.

According to the Science and Technology Innovation Board Daily, the reason why auto giants have lost their presence in India is that high taxes prevent most Indian consumers from owning their cars, which will lead to a decline in car sales.

According to media statistics, the Indian motor vehicle tax rate (including cars and motorcycles) has reached 28%, and the government will levy an additional tax of 1%-22% based on the type of car and engine displacement.

As a populous country, its per capita consumption level has been low. According to relevant data, the average annual income of Indian consumers is only 2,000 US dollars, and the budget for some consumers to buy cars is only 10,000 US dollars. This also means that ordinary Indians buy cars. The difficulty is greater.