Ford May Reopen Closed Indian Factories
Last year, the popular car manufacturer shut down its car plants in India after it recorded losses of over than $2bn in a decade.
When the decision was made known, it did not come as a shock at all. In 2012, Ford projected that the country’s growing middle class would eventually become one of its top three markets by 2020, but that was not the case.
By the time the company decided that it was time to let go, their market share had already dipped to less than 1.5 percent.
Some of their heavy investments during this time include two factories near the southern and western coasts of India, manufacturing cars as well as SUVs for both the domestic market and for export purposes.
Like we have said earlier, the loss in a decade is over $2bn. Even though they really tried, they couldn’t penetrate a price-conscious market that had more than enough options of cheap cars and two-wheelers.
However, all hope is not lost as there are still ways by which the company can recoup some of the losses. According to a report from the Economic Times newspaper, Ford is having conversations with the provincial government in Tamil Nadu.
They are considering whether or not the factory there can be turned into a plant for manufacturing and exporting electric vehicles.
They are also considering the possibility of making use of a plant in India as an export base.
From every indication, this can be seen as a smart and profitable move. However, it is not easy for US car manufacturers to make meaningful inroads in India, for instance General Motors ceased sales in the country five years ago.
Nevertheless, Electric vehicles are another way that the market of 1.4 billion people can be penetrated.
Also putting into consideration the fact that Maruti Suzuki, the local unit of Suzuki that enjoys a lot of patronage from the market does not sell Electric vehicles, this seems like a really good niche to go into.
The market is not much as it accounts for just 1 per cent of the total sales, the growth rate however is really impressive.
According to a report from the Federation of Automobile Dealers Associations, last month the retail sales of electric cars and SUVs went up to about 324 per cent, accounting for a dip of 7.8 per cent in the general sales of passenger vehicles.
Some of the world’s most polluted cities are in India, but the country has promised to go carbon neutral by 2070. Plans have been put in place to see that the country goes greener. Among the car companies that are to get subsidies under a production-linked plan for electric vehicles is Ford.
This could also serve as an inspiration to other car manufacturers in India for instance GM’s factory. GM’s factory in the country has not been functional for years now. China’s Great Wall Motors would have loved to purchase the plant but a labor union of the former workers is preventing the deal.
Examples of the very wonderful cars that Ford has brought into India include the Endeavour premium SUV, the EcoSport compact SUV as well as the Figo hatchback.
However, there are still the likes of Maruti and Hyundai that are seemingly more preferred by middle class citizens for the fact that they are cheaper.
EVs have indeed started to make waves. For instance Mercedes-Benz plans to bring to the market a locally assembled EQS which is the electric version of its flagship S-Class sedan.
BMW on the other hand is also bringing a fleet of electric products to India. There is a chance that Tesla too can penetrate the Indian market.
