When a major international vehicle manufacturer announces it is closing down operations in India, it’s news, especially when production is primarily fuel-efficient models such as the EcoSport subcompac SUV and electric and hybrid vehicles.
The move follows a decade of financial losses in India totaling more than $2 Billion, and will cost the company millions more to move manufacturing elsewhere.
That includes North American models with Indian names and others specifically for the Indian and East Asian market. Besides the EcoSport, Ford India produces models including Figa, Freestyle, Aspire and Endeavor.
Since the EcoSport is built in India also for the American market, it means the end of the subcompact SUV, according to the Detroit Free Press.
For many, that’s not a great loss, since Ford EcoSport hasn’t been that popular in North America, where just 60,000 models were sold in 2020. Sales of same-size Chevrolet Trax, Honda HR-V and Nissan Kicks did better.
Ford is not bailing entirely on India. Ford India will maintain parts depots in Delhi, Chennai, Mumbai, Sanand and Kolkata, and will work closely with its dealer network to restructure and help facilitate their transition from sales and service to parts and service support.
What makes this all very confusing is that Ford India will continue to produce parts for export for the Ranger at the Sanand Engine Plant. In case you didn’t know, Ranger is Ford’s other best-selling pickup truck after the iconic workhorse F-150.
That plant employees more than 500 workers, and about 100 employees supporting parts distribution and customer service
So the big deal is that Ford will no longer produce models in India for export to North America and Europe.
Excuse me while I yawn.
Instead of producing vehicles in India for sale in the USA, Canada and the EU, Ford India will expand its 11,000-employee Business Solutions team in India in coming years to support Ford globally with engineering, technology including software and other business operations.
Also as part of what Ford is calling “restructuring”, the company will market new models including Mustang coupe and Mustang Mach-E to India.
Ford already has announced plans to invest more than $30 Billion globally to deliver all-new hybrid and fully electric vehicles, such as Mustang Mach-E.
In connection with this announcement:
Ford currently expects to record pre-tax special item charges of about $2.0 billion, including about $0.6 billion in 2021, about $1.2 billion in 2022 and the balance in subsequent years.
Within that total will be about $0.3 billion of non-cash charges, including accelerated depreciation and amortization.
The remaining cash charges of about $1.7 billion will be paid primarily in 2022 and are attributable to settlements and other payments.