Global Finance

Ford will stop producing automobiles in India; Sources

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Sources say Ford Motor (NYSE: F) Co would stop making cars in India and shut down its operations in the nation, becoming the latest carmaker to leave a market still dominated by Asian competitors. According to one of the individuals, the decision was made since it was no longer profitable to continue, and the procedure is likely to take around a year.

Ford is the latest vehicle manufacturer to stop production in India, following in the footsteps of American corporations such as General Motors (NYSE:GM) and Harley-Davidson, who have previously exited a market that once promised exponential development. Ford has failed to win over India’s frugal shoppers and earn a profit in a market dominated by primarily low-cost automobiles manufactured by Suzuki Motor Corp and Hyundai Motor.

According to the second person, the American manufacturer will continue to sell some of its vehicles in India through imports of fully-built vehicles and knocked-down pieces, while also providing support to dealers to service current customers. Ford did not immediately respond to an email requesting comment. It earlier stated that it would make a decision on a capital allocation plan for India in the second half of 2021.  Ford would allocate capital in accordance with its aim to create continuously high cash flow and reach an 8 percent company adjusted EBIT (earnings before interest and tax) margin.

The decision to stop local manufacture occurred after Ford broke its relationship with indigenous automaker Mahindra & Mahindra – a move that would have destroyed most of Ford’s independent activities in India but would have allowed it to launch new vehicles faster, at a cheaper cost, and with less investment. Twenty-five years after Ford’s entry into India’s passenger vehicle market, it holds less than a 2 percent share of the world’s second most populous nation.