Prior to Ford, other carmakers that exited India in recent years include General Motors and Fiat
Due to increased competition and stalling sales, Ford had to take the hard decision to end its operations in India. Even though there were speculations about Ford’s potential exit, not many believed in such stories.
That’s why when Ford officially announced to halt production, it came as a shock to fans, customers, dealers and the entire auto industry. Production for domestic market was stopped with immediate effect, whereas production for export markets will be completely stopped by Q2, 2022.
Reduction in Ford India Dealers
Ford’s decision to exit India has been a reason for concern for its customers. The most common worry is what happens to Ford dealers that provide service and spare parts. In this respect, Ford has said that they are expecting “a small reduction in the number of dealers”.
To ensure that customers continue to get the desired services, Ford has launched an incentive program for its dealers. The ones that continue to provide services to customers will become eligible for adequate compensation. This policy will ensure that most dealers continue to provide after sales services in the same manner as earlier.
At the time of announcing its exit, Ford had expressed its commitment towards providing full support to its customers. It includes service, parts and warranty support. For this, the company will maintain parts depots in cities like Mumbai, Delhi, Sanand, Chennai and Kolkata. Ford will also be helping its dealers in transitioning from sales outlets to ones that are focused on service and parts.
Many of the existing Ford car owners are unsure what will happen to their cars in a few years. Questions like will they get service / spares on time, etc are being asked on social media by concerned owners.
In the future, Ford expects that majority of its dealers will function as service and parts providers. The number of dealers selling new vehicles will be relatively fewer. As per a report published by the Federation of Automobile Dealers Associations (FADA), there are currently 170 Ford dealers managing around 391 outlets. Inventory available with these dealers is around 1,000 cars. In terms of loans taken from banks, this inventory is worth around Rs 150 crore. Ford India dealers are announcing stock clearance sale of the existing inventory of Figo, Freestyle, EcoSport and Endeavour.
Although Ford has stopped production, it will continue to sell some of its exclusive cars in India. These will be imported in India as completely built units (CBUs). Some of the existing Ford dealers can be given the chance to sell cars such as Mustang coupe, Mustang Mach-E electric, etc.
From a business perspective, Ford’s decision to stop production in India seems like an appropriate choice. The company had accumulated losses in excess of $2 billion in the past decade. In 2019, non-operating write-down of assets amounted to $0.8 billion.
Another negative factor for Ford was that the company did not expect any major recovery in terms of sales. Ford’s failed attempt to stitch a partnership with Mahindra was another key factor that contributed to the company’s decision to end India operations.