Home Car News Ford India planning to sell Gujarat car plant due to low sales?

Ford India planning to sell Gujarat car plant due to low sales?

Ford Figo is made at the Gujarat plant.
Ford Figo is made at the Gujarat plant.

There has been talks that Ford is considering to cease its solo operations in India and widen the scope of its partnership with Mahindra beyond platform and technology sharing. Such a move would help Ford continue to have a presence in India which is touted to be the third largest auto market in the world in foreseeable future without a high financial liability that comes with owning heavy assets likes manufacturing plants.

In what is perceived as a step closer to ending its independent Indian operation, Livemint reports that Ford India is currently in talks with a potential buyer, a multi-national automaker, to sell is Sanand manufacturing plant in Gujarat. The plant which went on stream in 2015 was set up at an investment of around USD 1 billion and has an installed production capacity of 2.4 lakh vehicles and 2.7 lakh engines.

The state-of-the-art manufacturing facility is not faraway from port, making it suitable for export operations but the lackluster sales performance of the new Figo family in both domestic and export markets has led to unsustainable levels of capacity utilization. According to Livemint’s resources, Ford’s Asia-Pacifi HQ in Shanghai would be handling the negotiations with the potential buyers but no time frame is available as of now.

Ford Gujarat plant.
Ford Gujarat plant rolled out first car in March 2015.

Responding to the publication’s email query, Ford India spokesperson stated: “We reject the rumors about exploring opportunities to sell the Sanand plant as mentioned by your sources in the industry. We find the assumptions by the sources both malicious but unfounded —choreographed to harm Ford’s reputation in Gujarat.”

The person also added that Ford will continue to make cars in India, for India and the world. Ford’s Chennai plant which currently builds EcoSport and Endeavour has an installed annual production capacity of 2 lakh vehicles and 3.4 lakh engines.

It is to be noted that credit ratings firm Moody’s recently downgraded Ford’s credit to junk citing the American automaker’s ‘business challenges and poor financial performance’ on a global scale. The struggling automaker must be looking at cutting costs and offloading poorly performing assets across the globe, and we think Sanand manufacturing facility qualifies as an offload-able asset.

Considering that Ford’s Gujarat plant is modern and is conveniently located for export operations, it would be a good buy for any new or existing OEMs who are looking to kick start their operations in India. Will it pave way for yet another Chinese automaker to establish its presence in India just like how SAIC (MG Motor’s parent company) entered the scene by buying GM’s Halol plant?

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