Is Ford reconsidering its India re-entry? Decision delayed till late summer

Ford’s much-anticipated return to the Indian market has hit a roadblock, with the US auto giant reportedly delaying its final decision until late summer. The company was initially expected to unveil its detailed India strategy by January, but is now taking a step back to reassess its plans.

 

According to a report in the Times of India, sources familiar with the matter said that Ford’s board discussed the issue last month and opted against making any immediate announcements. "The company is using this time to rethink its India strategy," a source revealed.

 

A Ford spokesperson reiterated the company’s commitment to utilising its Chennai manufacturing plant for global markets. “(We are) committed to utilising the manufacturing capabilities in Chennai to serve global markets and are thankful to the govt of Tamil Nadu for its continued support as we advance our plans. Further details regarding the type of manufacturing, timelines and other specifics will be shared in due course and we have nothing additional to share at this time."

 

 

Why is Ford rethinking its India re-entry?

 

Several factors are behind Ford’s hesitation. The current political climate in the US prioritises domestic manufacturing, potentially making foreign investments less attractive. Additionally, Ford would need to invest significantly to refurbish its Maraimalainagar facility, which has been idle since the company's exit from India in 2021.

 

Industry experts estimate that converting the Chennai plant for electric vehicle (EV) production could cost anywhere between $100 million to $300 million, as major structural changes, including new welding and assembly lines, would be required.

 

Why Ford exited India in 2021?

 

Ford’s retreat from India in 2021 marked the end of a decades-long struggle. Despite launching popular models like the EcoSport, Figo, and Endeavour, the automaker failed to compete with market leaders such as Maruti Suzuki, Hyundai, Tata Motors, and Kia, which dominated with their budget-friendly, fuel-efficient models.

 

With $2 billion in accumulated losses and a market share of less than 2 per cent, Ford found it increasingly difficult to sustain operations. The collapse of its joint venture with Mahindra & Mahindra in 2020 further complicated its position, leaving the company without a local partner to help navigate the price-sensitive Indian market.

 

While Ford ceased domestic production, it continued to support existing customers through spare parts and service networks, and it still exports vehicles from India.

 

Ford’s EV bet: A new opportunity?

 

Ford's potential return could be centered around electric vehicles. The company has been in talks with the Tamil Nadu government about repurposing its Chennai facility for EV production aimed at global exports. If the plan materialises, Ford could position India as a key player in its global EV strategy.

 

Reports suggest the initiative could generate up to 5,000 new jobs, complementing the 12,000 already employed in Tamil Nadu’s auto sector. This move aligns with India's push to become a global EV manufacturing hub and attract foreign investment.

 

Although Ford has not provided a definitive timeline or details on specific EV models, its reconsideration of the Indian market reflects the country’s growing prominence in the global EV landscape. Whether Ford takes the plunge or steps away once again remains to be seen—perhaps not until late summer.