Table of Contents

ford which has just finally and

officially announced that it will be

shutting its manufacturing operations in

india now this is really a big deal

because ford it came one of the first

manufacturers to come to india in around

95 96 the first car they did was the

ford escort which was more of a ckd uh

car with mahindra joint went their first

joint venture partner and we’ll come to

that later almost a second

and then they started off with the ford

icon which was really the first made in

india car and that car was special for

us because actually with that car we

launched auto car india it was a world

exclusive on the first issue of autocar

india in september 99 so in a way very

special for us at auto car as well and

since then ford has had a bit of a

difficult ride because if you look at it

after 25 years what have they got to

show

a minuscule less than two percent market

share and two billion dollars of losses

now that really is um

you know after a quarter of a century

obviously someone somewhere is going to

say hey uh you know are we going to keep

throwing uh uh you know

good money into a market where we can’t

make any money and i think what we’re

going to talk about is really what

precipitated ford’s uh you know exit in

terms of manufacturing now ford is is

saying that they will continue as a

brand in india uh of course they’re

going to be continuing with certain

imports how those imports are going to

be doing that again we’ll come to later

but let’s just talk about the ford story

so clearly ford has had a long history

in india ford’s actually had some really

big moments uh the icon was a big moment

which it had it kind of established ford

as a brand and when it sold it was

really one of the best sellers in its

class uh really a car tailored for india

anyone who drove it would really love

the icon because it was a great car to

drive one of the nicest cars would have

a fantastic row cam engine 1.6 rocam

engine

and it was very very affordable as well

uh then after that ford has had a string

of products so not too many products i

mean it had the next generation uh

fiesta then they brought in the endeavor

at that point they tried with the fusion

fusion was a bit of a flop a bit too

early for its time and then the next big

moment for ford really was the ford figo

which again was the way ford should be

making cars they took a legacy platform

which worked well really low cost car

for india but they kind of made it stick

because it was cheap to buy and even

cheap to own ford at that time with the

figo started this whole concept of

really giving um you know service which

was low but somehow the ford brand

really didn’t take off again issues with

certain dealers legacy dealers which

really didn’t deliver on the promise

which ford had had got and then moving

forward uh the big next big blockbuster

was the eco sport it was shown at the

auto expo in 2012 in delhi and then came

uh on the roads in 2013 and the eco spot

really has been the best selling ford

for ford india and really the halo car

in many ways and any one of us who

driven a ecosport really loved it it was

our car of the year as was the figo

actually so really you know you had some

really special fords over here and

certainly a shame that they couldn’t

make the most of it so really what is

the problem i think the fundamental

problem is that it is

a cultural disconnect between

american companies like ford and india

now the thing about ford is that they do

things in a certain way in which a very

very high cost in fact they spend where

the customers can’t see it i mean even

the sun and plant quite frankly they

made a taj mahal out of it i mean you

don’t need a plant which has to take

some crazy uh you know gale force five

hurricane standard just because that’s

the way it is built in in in us

you don’t have to have forklifts which

cost uh seven eight times more than what

it could normally cause just because of

their last one percent

in health and safety which they want so

for building a plant in india to global

standards and what happens is with that

cost they need about a hundred thousand

cars to really break even in a market

like in with a plant like sun and then

of course that never happened of course

when they came in projections of the

indian market were very high it was

going to zoom to seven million that’s

what even ford wanted but it didn’t

happen so obviously combination of a lot

of factors that uh

sanan really was finally a millstone

round their neck because at maraimalai

nagar they were making cars profitably

endeavour very very profitable car sad

that that’s gone

but endeavor was a car that had 30

percent of the overall india was 30

percent of the endeavour market so

really you know to give that away must

have been very very painful for ford

because the endeavour has stopped and

will not also build will also not be

produced in india

but again with sun and again you know it

was that cost structure and that’s when

it started getting a little pear shape

and then around 2017 ford had to make a

decision what do we do

we can’t stick around alone they just

didn’t have the scale now the auto

business it’s all about scale i mean you

need a lot of volume to really make it

work and the way to do it is either you

have the products that do it uh which

clearly they didn’t or you have the

market that grows uh to that sense and

you grow with the market again the

market wasn’t growing and the only other

way was to partner up now they had a

certain choice of partners they could

have even gone with changan which is

their chinese partner but then they

chose to tango with mahindra now

honestly it wasn’t such a bad idea

because if you look at it the synergies

were fantastic they had a relationship

with mahindra

and actually the partnership on paper

looked really really good so basically

the partnership is they would both

develop a range of suvs in fact

about seven suvs were planned between

both these companies so

that’s quite a lot and with that in mind

is what ford went forward

but i think ford what it did is it

passed certain gateways

basically on a handshake and uh finally

when the joint venture fell through for

a variety of reasons now everyone’s got

their story ford have got their stories

they basically feel that minds really

pull the plug on them at the last minute

and they had no choice but to pack up

whereas mind also have their side of the

story there were kind of differences on

indemnities on certain royalty issues on

certain transaction prices between ford

india and the rest of the ford universe

which was being shared all kinds of

issues so you know i’ve been talking to

some of these guys off the record but

whatever it is

uh the fact is that the partnership fell

apart and a proposed joint venture which

ford was banking on

didn’t come and fundamentally that is

the problem why ford has exited because

it did not have a plan b

it’s not that they uh you know it’s not

that they didn’t have the money they had

already committed to a certain amount of

investment in the joint venture uh it’s

not that they didn’t have a plan in fact

india was to be a very important base to

export cars to the img group which is

the international market group for ford

which is about 100 countries so ford was

going to use india to export to 100

countries so again ford was really

desperate to stick in india unlike what

people think that they’ve up sticks and

gone they were desperate to stay in

india just for this but they couldn’t

stay alone the business economics just

didn’t work out

more important is that

they had no product pipeline because

what they were banking on with the mines

a joint venture that had gone they had

to start with a clean sheet of paper and

when they did that

it would take at least three years for

the next new product to come and there’s

no way they could have continued uh you

know operating two plants which are as

it is running about 20 25 capacity with

this aging product lineup and don’t

forget in the next couple of years

they’re going to be emission regulation

changes so again there’s going to be

investment required for that then of

course the thought was should they be

investing so much at a time when

electrification is coming so the whole

timing of it really wasn’t uh you know

it just didn’t work out

so ford went and knocked on a lot of

uh doors of a lot of oems they spoke to

mg mg of course uh you know i i think uh

it was not possible with them halo is

already uh full up they don’t have uh

they don’t have plans immediately for

another plant uh

starter would have been a great

fit actually because what tata needs is

a four point two four point three meter

suv which it doesn’t have right now and

uh it would an suv that starts between

the nexon and the uh harrier ford had

that what is the b772

uh it was to be joined with mainzer but

that was fundamentally a ford platform

but again things didn’t work out with

tata motors as well uh uh citron again

had their own plans they even spoke to

ola electric but for uh that with them

setting up a one million uh capacity uh

uh plant for for scooters obviously

there were no in no need of capacity so

literally they knocked at every door

desperate for an alliance or a

partnership so that they could stick on

and i think that’s really the important

point so but in the absence of that

they’ve had no choice but to shut shop

which is really the same and what a

shame and what i’m really uh you know

sad about is even something like the

endeavor which really is a

low cost operation it’s an assembly

operation doesn’t require too much uh

infrastructure it doesn’t require uh too

big a plant even that was they were

unable to continue just because the cost

of just running that alone

uh the business sense uh

the business case wasn’t there at all so

even the endeavor has gone and ford have

announced that they’re going to seize

all uh local uh

product manufacturing so even the

ecosport which we’ve seen a lot of spy

shots off and that was due for an

imminent launch

that also has now been axed it is

cancelled the 2021 ecosport is not going

to be coming uh to a showroom near you

and honestly the ecosport had a lot

going for it because earlier the plan

was to use mahindra’s 1.2 turbo petrol

but when that fell through they were

going to continue with the 1.5 dragon

and then what we found is that the

launch which was in april that was

getting pushed and pushed so early signs

that ford were really you know in exit

mode because there’s no point launching

uh an ecosport if uh

they’re getting out but then you will

ask why did they launch uh you know the

figo automatic well the truth is they

had around 200 250 kits of the automatic

and just put that into the market as it

is that car was to be launched a lot

earlier uh but the pandemic delayed it

so that’s uh how it was

and uh going forward i think ford is uh

you know they say they’re going to be

here in india uh they’re going to be

doing business in india but you know

it’s going to be very very challenging

because quite frankly for a mass brand

to survive on imports where the duties

are astronomical

uh is going to be quite challenging we

know they’ve sold the mustang again in

very limited volumes they’ve just

announced that they’re going to bring

the mustang marquee the all electric

mustang that would be interesting

there’s going to be bringing the ranger

wild track which we’ve written about in

auto car india and a couple of more cpus

or imports which there are but again

those would just amount to a handful so

again it would be very difficult to

sustain the massive operation that ford

has right now and clearly what we will

see is that

dealers in the smaller cities they might

be

difficult to sustain their operations

they might survive just now on service

because there are 1 million fords in the

market so that’s quite a large vehicle

park and you know good service revenue

for the dealerships but uh clearly in

terms of retail and sales it might just

shrink to a handful and that’s what’s

going to happen to ford their footprint

in india is going to shrink to something

quite minuscule but the point is they

are having a presence in india however

small just to keep their foot in the

door

because uh you never know in the future

this is a big market it’s not a

profitable market that’s the whole issue

and that’s i think what

the big manufacturers have come to

realize that though india is this

massive market it’s very very difficult

to make money over here and only a

handful of manufacturers will really

corner the market which is maruti and

and the koreans i mean that’s really

they’re becoming stronger and stronger

while the week are getting weaker and

weaker and some of them exiting like

we’ve seen before so uh really that’s

really the story of ford fundamentally

they’ve left uh because

the uh

the business could just not be sustained

and they actually did try to stay on the

only way to sustain the business was to

find a partner was someone to share uh

capacity product development that sort

of thing

no no company really showed interest so

the timing was bad and so that’s why

they’ve had to shut shop

as far as their plans go now the other

now what i want to talk about is what

does this mean for existing ford owners

well i just spoke to

we had an interaction with the md anurag

merotra and he said or he assured

all ford owners that spare parts will

still continue to be available that

don’t forget that even if ford has a

short operation the spare parts are

usually made by a lot of suppliers but

definitely some spares come from within

four so i don’t know how that’s going to

pan out but he has assured that spare

parts will continue to be freely

available in his words or court for the

foreseeable future and they will be at

the same competitive price that ford has

been giving all along so that’s the

reassurance he’s giving as it’s existing

for the customers but clearly i think

the other knock-on effect we’re going to

see is that when a manufacturer stops or

seizes production and all cars stop

seizing production the resale values of

the cars drop dramatically so that is

one issue but the good thing is that the

used car market is very hot right now

because it’s so hard to get a new car

everyone’s hanging

on to the used car so those are in short

supply and this whole demand supply

issue is pushing up the price of um not

only new cars but used cars as well so

thing is hang on to the fords right now

uh you know it’s it’s still early days

uh service will continue even the plants

are not going to be

kind of wound down completely they have

got certain production export

commitments so uh

until 2022 you are going to see uh you

know production continuing uh for first

quarter of 2022 and then until they wind

down completely ford have also said that

they will continue

production of uh engines at the sun and

plants but that’s mainly for global

markets don’t forget that’s quite

interesting you know as everyone else is

stopping ic engine production and

development because they’re going

electric

markets like india or countries like

india can be a great base for low cost

small displacement petrol and petrol

engines which is what ford is banking on

and that’s even actually what sterlantis

is doing with uh these psa and the

citroen brand so uh again just to kind

of

wrap it up and say that uh yes ford

after over 25 years of making india cars

is uh finally going to stop that uh stop

producing cars in india but again they

are going to be here with a very small

presence with some small cars how long

that will continue we don’t know but i

think clearly uh ford is uh categorical

in saying that it’s not upping sticks

the way gm did and leaving people in the

lurch of course that remains to be seen

how it pans out with the dealers but i

think one thing i will say is that

anyone who’s worked with ford that know

that they’ve got a certain value system

and they are the nice guys in fact a lot

of people say they’ve been uh too nice

and uh

that has come at a certain cost which

has been reflected in their business

case and that’s also again one of the

reasons why they’ve not been really

viable in india so uh

but

again to all ford owners uh is this a

cause for concern well uh anyone any

manufacturer who’s uh you know let’s say

exiting the the country in terms of

production uh or not making the cars you

own anymore and has stopped production

of it obviously there will be some

effects as much as manufacturers you

know give you reassurances and anyway

with that uh i’m happy to take some

questions which i will

uh let me

look at that we’ve got one question

saying that

what will happen to service will service

centers close i don’t think they will

close immediately because don’t forget

service is uh

is is a lot of revenue for uh

dealerships that’s where they make a lot

of revenue so and with such a large

vehicle park almost a million fords sold

since the beginning i think uh you know

service centers will continue and that

they’re not going to shut down in the uh

in a hurry now the question is wasn’t

the eco sport facelift coming yes it was

coming the launch was absolutely

imminent in fact we were expecting it

this month but with this announcement

the eco spot launch has been cancelled

there is no more ecosport coming

will the bronco come to india that’s

another question

uh yes there are plans to bring the

bronco to india i think when there’s an

rhd version uh it will definitely come

and i think that’s one of the models

that is slated to come to india

what happens to resale value uh good

question uh and i think i’ve answered

this i think resale value will take a

hit purely because uh these cars have

stopped being produced and typically a

car that’s out of production takes a big

hit on resale value and more so when you

know that the company uh as far as a

manufacturing operation has always is

also stopped

is it advisable to buy a used ford right

now well you know i think uh

some of the fords are really good they

are great to drive buying a used ford is

more about buying with the heart than

the head to be honest but i think if you

get a good use for the great eco sport

in good shape i mean personally i love

the ecoboost engine that eco sport was

just absolutely brilliant i would snap

it up in a jiffy and if you get a good

price because if the resale value gets

impacted because of all these

announcements i think it’s definitely

worth a buy

uh another question is is there any

possibility of a partnership with any

other makeup well you know i think it’s

too late now because uh ford

has run out of time it’s had to take a

call it was bleeding uh a lot and

obviously no car maker was interested in

partnering with ford i think what will

happen right now is

all their assets will be up for grabs

and there will be manufacturers possibly

looking at the plants because ford will

be selling off the plants and you know

if they get that for a steel uh you know

don’t be surprised if some of the

existing oems want a bit of capacity uh

snap some up the plants

uh another question is what were the

best fords in india according to you

well you know a long list uh i think

ford’s

they’ve made some of the best driving

cars you know cars which really put a

smile on your face and honestly as i

said personally i’m really sad for as a

brand is going because a company with uh

you know great products great people and

great values as well that’s really what

ford stood for when you ask any employee

they know that the ford value system

their hr practice is really one of the

best a very very humane company but

coming back to the great falls i think

for me it started off with the icon

absolutely brilliant car uh and and for

me it kind of

it it sort of

signified that golden age of motoring in

in the early 2000s and that’s really

when autocar started also i mean it was

really cheap

it was quick

it was a time when uh you know the the

road network started building there were

no speed limits you were not encumbered

by regulations all that sort of thing

and you know it was cheap fun affordable

motoring and you know really put a smile

on your face

and i think the other other fords for me

after that i even like the the fiesta

which was the b376

again because of the handling i think

ford’s steerings have been one of the

best beat hydraulic or electric

and uh i think uh

the eco sport was another absolutely

brilliant car because it was based on a

phenomenal chassis which was the b2e

chassis again quite an expensive chassis

that is the problem because you know

ford really uh

banked on its european products which uh

to be honest were a bit too expensive

for the indian market that’s why even

the next generation fiesta which had

come which was the b299 it flopped in

india because it really wasn’t tailored

for this market and it was a european

fiesta bought over here

and it just didn’t work but again coming

back to the eco spot i think the eco

sport with the uh one liter ecoboost

engine which i think is still today the

best

small capacity petrol engine i’ve ever

driven it’s won a lot of awards

uh including international engine of the

year award multiple times on which i’m a

juror and just the way it handles the

way it drives uh eco sport just

absolutely brilliant i mean interiors

one to great wasn’t too spacious but

really as a driving it was

absolutely uh amazing so really these

are some of the cars that surround and

of course i would even to say the ford

mondeo uh not many people will remember

the ford monument but it was by far the

best driving saloon of its time because

the handling was absolutely brilliant

phenomenal uh pointy front end you know

for a front wheel drive car very little

understeer

uh strong engines

but again expensive and thoroughly

unreliable and not suited for this

market so it was very very short-lived i

think ford had learned along the way

and i think even the current endeavor a

very evolved product uh it is uh

you know i think it’s been a favorite

with a lot of people they haven’t been

able to sell in the numbers they could

have but again the endeavor a very uh

strong product

so um

the other uh another question is ford

had an image of being expensive to run

did this image affect ford which are

otherwise safe and fun cars so yes ford

did have this image and in fairness to

the company they worked really hard at

it and in fact their service costs

really they did come down uh customers

were realizing that but i think what

they couldn’t get

a handle really was some of their

network needed a change and honestly uh

you know that was not completely within

ford’s control so i think they’ve had a

legacy of a weak network right from the

days of the mahindra for the joint

venture and uh

and then again which carried on after

ford went uh solo uh and they’ve tried

very hard in fact at the time of the

figo uh they really you know kind of

worked hard at changing this perception

but again you’re up against companies

like maruti uh you know virtually

whatever you say they just own that

space of being very cheap to own and run

and i think ford moved away from its

real promise it’s real character of

being fun to drive and went down this

low cost of ownership route

which again you know as i said you’re

competing with uh the biggest and most

formidable car maker in the world and

it’s just best to stay away from them

they’re tough whether it’s in products

whether it’s in perception or whether in

strategy as well

so um

another question is

is a ford at uh heavy discount or

goodbye yes i think uh it definitely is

and this question has been asked earlier

i think ford

ford afforded a good deal right now um i

mean i would definitely pick one up uh

you know if you get something like an

ecosport uh that would be really good uh

i think even the ecosport diesels are

really good because uh they made ford

have made some good bs6 diesels and

before diesels fade away it’s a good

time to get a diesel uh i think even the

endeavors right now if you can get a

good deal on an endeavor definitely

worth buying uh eco sport as well so

yeah i mean four products have been good

i’ve not really been too much of a fan

of the fico because i think the cars

have generally been a bit too heavy

and uh uh yeah and not not as let’s say

exciting as uh the uh eco sport and and

the bigger fords

uh so i think that’s we’ve got uh yeah

we’ve got a lot of uh other questions uh

uh you know will uh

uh cbu units of ford continue and end up

yes we have said that uh but they

definitely will

will ford provide warranty uh yes they

will i don’t think they’re gonna go away

from that don’t forget ford is not

leaving india so you can catch them if

they don’t support your warranty so i

think that’s one important point to

remember they will continue here trying

to sell niche products but i think

clearly um you know it’s quite clear

that uh you know this company is is is

is going to be here that’s what they’ve

gone to pains to sing uh it’s going to

be very very difficult i think you know

it’s really a a sad day for the whole uh

auto industry because you know when a

storied legacy manufacturer like ford

leaves india sometimes you kind of

retrospect is you know is this a good

thing

one can say that yeah ford made a lot of

mistakes they don’t know how to operate

in india a lot of

western car makers can’t hack the indian

market they’ve just not been able to do

that all that is fair enough but at the

same time the overall environment over

here

there are so many barriers which makes

it very very difficult

for

a lot of makers to kind of make a

headway it is really locked in by a

handful of automakers right now and

fundamentally we’ve seen these groups

we’ve got

suzuki which will be joined by toyota

then we’ve got the koreans which is

hyundai kia which is one group and we’ve

got the indian oems because obviously

their survival depends on this market

you’ve got mahindra and tata of course

you know being quite us having a strong

footprint in here but other than that if

you look other than these players

everyone else is very very marginal and

that’s the whole problem because you

know you’ve seen this big skew most of

the big ones taking about 85 percent of

the market and leaving the others to

fight for the 15. so it does show that

there are some structural issues with

the indian market which is leading to

that but again that doesn’t take away

from the fact that at the end of the day

ford couldn’t quite hack it in the

indian market i mean they just

as i said it was a cultural misfit they

didn’t know how to make cars affordable

for india

affordable enough

they just didn’t have that sense of

frugality and more important they spent

where they shouldn’t have spent and cut

corners where they shouldn’t have cut

corners and i think that’s finally the

balance that makes

the difference between a successful

automaker and a not so successful

automaker so i think with that i will uh

say goodbye uh great uh

great talking to you about uh actually

what i think is uh a pretty sad day uh

to see a company like ford uh kind of uh

shut uh operations uh in india and

anyway thanks to all of you all for

tuning in and hope i’ve answered all

your questions

bye

By Avnish Singh

Hii. I am Avnish Singh, By education i am a mechanical engineer and and a passionate blogger and freelancer. In Mera Up Bihar I write interesting articles which provides useful information to my readers.

Leave a Reply

Your email address will not be published.