Ford Sells Indian Production Plant to Tata Motors

Ford is the latest western automotive brand to finally pull the plug on its India production operations agreeing to sell out to domestic giant Tata Motors.

The BBC reports that the Indian automaker has agreed to buy a Ford manufacturing plant in the western state of Gujarat for 7.26Bn rupees ($91.5M). Foreign automakers, including General Motors, Nissan, Volkswagen-owned MAN Trucks and even Harley-Davidson Motorcycles have all pulled the plug on production facilities on the continent.

The issue has been that despite the size of the population, demand for vehicles has been hit by a weak economy, low employment plus the devastation of the pandemic. Now Tata hopes to mop up the more resilient demand that exists at currently three million new vehicles a year, compared to around 20 million in the similarly populated China.

The deal between Tata’s electric vehicle subsidiary and the US carmaker’s Indian unit covers land, machinery and all “eligible employees”. Ford stopped production in India last year after struggling for more than two decades to generate profits there.

“With our manufacturing capacity nearing saturation, this acquisition is timely and a win-win for all stakeholders,” Tata Motors said in a statement. The parent company of the UK’s Jaguar Land Rover added that annual production at the Sanand plant will initially give it new capacity of 300,000 vehicles a year, which could be increased to 420,000.

The announcement marks an important step forward in Ford’s efforts to restructure its Indian business, Ford transformation officer Steve Armstrong told the BBC. In September last year, Ford said it would close its Indian car factories as part of a move that would cost it around $2Bn. At the time, the automaker said that about 4,000 workers would be affected by the decision. Ford’s operations in India had seen losses of $2Bn in the previous ten years.

However, domestic automakers in India are seeing a rise in demand. Mahindra and Mahindra reported that demand for its vehicles was outstripping production as people rushed to buy its popular sport-utility vehicles. That helped boost its quarterly profits as sales of its passenger vehicles soared to by 74% from a year earlier.

— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_

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