US auto major Ford Motor’s decision to abort its India operations has left both dealers and employees in the lurch. One of the first American auto giants to enter India, back in 1996, Ford Motor decided to quit the Indian market on September 9 after incurring nearly $2 billion losses over the past 10 years.
The carmaker announced that it would shut down its manufacturing facilities in Chennai and Sanand, thus closing the production chapter in India. Ford will wind down vehicle assembly in Sanand by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022, according to a company statement.
Ford’s decision is a blow for its 170-plus dealers, spread over 391 outlets across the country. Besides the dealers, around 4,000 employees and another 40,000 employed with the dealerships and service facilities are now a worried lot. The dealers currently have 1,000 cars in their inventory along with hundreds of demo or test drive cars.
Investments of around Rs 2,000 crore are at stake due to this overnight development. The dealers also have around Rs 150 core in bank loans collectively, according to industry sources. The Federation of Automobile Dealers Associations (FADA) has expressed concerns despite assurances from Ford India President and MD, Anurag Mehrotra that the dealers would be adequately compensated.
Ford India was busy appointing new dealers till even a few months back. Now, with hardly any takers for their cars, despite deep discounts and offers, they would face the brunt of financial losses.
Also read: Ford driven out due to competition, decision not a reflection of Indian economy, says govt official
Meanwhile, FADA has revisited its demand for the government to introduce the Franchise Protection Act. Ford is not the only American company to make an abrupt exit. Earlier, General Motors, Harley Davidson, Man Trucks and UM Lohia had exited India in a hurry.
FADA has been lobbying for the Franchisee Protection Act to guard against such exits. Other countries such as China, Russia, Japan, Australia, Italy, Sweden, Brazil, Mexico, Malaysia and Indonesia have their own laws in this regard. Though this particular Act -- meant to help dealers, customers and the MSME sector -- has been proposed by the Parliamentary Committee on Industry, it is yet to be passed by Parliament.
(Edited by : Shoma Bhattacharjee)