In an unexpected turn of events, Ford Motor Co. has scrapped plans to sell its Tamil Nadu plant to the Sajjan Jindal-led JSW Group, The Economic Times reported citing sources. This plant is Ford’s only remaining factory in India, and the deal being called off has given rise to suspicions that the American auto giant may be considering starting afresh in the world’s third-largest auto market.
“We continue to explore alternatives for our manufacturing facility in Chennai and have nothing further to share,” the company said in an emailed response to the paper. It’s been two years since Ford announced its withdrawal from India.
Meanwhile, the other party in the deal – JSW Group has declined to respond to queries, as per the report. JSW had initially agreed to acquire the Ford plant for approximately $100 million. This deal came on the heels of the conglomerate securing a 35 percent stake in a joint venture with SAIC.
Factory for sale or not for sale?
Ford’s departure was announced amid significant losses and a slowdown in passenger vehicle sales in 2021 due to the COVID-19 pandemic, it added. In January, Tata Motors acquired Ford’s Sanand plant in Gujarat to bolster its electric vehicle production.
The company’s Maraimalai Nagar plant has been up for sale since Ford shut its India unit. Strategically positioned near Chennai port and spread across 350 acres, the Ford plant boasted an annual capacity of 150,000 cars and nearly 340,000 engines. It ceased operations in July 2022
If the sale is delayed and not cancelled, other potential suitors for the factory include Vietnamese electric carmaker VinFast, which is looking to enter the Indian market; and another unnamed contender, the report said. Initially, Mahindra and Mahindra had shown interest but didn’t pursue the opportunity vigorously.
Company Plans
Ford’s departure from India in September 2021 was framed as a strategic restructuring aimed at achieving sustainable profitability. Despite accumulated losses exceeding $2 billion over the past decade, the company continued manufacturing cars and engines for exports until July 2022. Notably, Ford India recorded profits of ₹505 crore in FY23 driven by vehicle and engine exports before eventually shutting down its vehicle manufacturing operations.
The surge in the Indian EV segment prompted global automakers to reassess their India strategies for electric and internal combustion engine vehicles. In October, India-born Kumar Galhotra was appointed COO of Ford, signaling a potential re-evaluation of their India operations. The pandemic and the dissolution of the M&M partnership further limited Ford’s options.
Ford’s decision to discontinue manufacturing came after an extensive evaluation, including considerations for contract manufacturing, as revealed during the restructuring announcement in 2021. While selected for the government’s Productive Linked Incentive Scheme, Ford opted out of the scheme in May 2022.
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Published: 20 Dec 2023, 12:01 PM IST