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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
