Ford wakes up badly from that Indian dream

Ford was hit by $ 2 billion to shut down car manufacturing in India after its compatriots General Motors and Harley-Davidson closed their plants in India.

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Ford was hit by $ 2 billion to stop building cars in India.

When Ford Motor Company built its first factory in India in the mid-1990s, US automakers believed they were buying into the next boom in China. With the liberalization of the economy in 1991, the government welcomed investors and expected the middle class. Fuel consumption frenzy. Increased disposable income is projected to help foreign automakers gain as much as 10% market share, according to forecasters. Davidson Inc closes domestic factory. Among the remaining foreigners, Nissan Motor Co., Ltd. of Japan and Volkswagen AG (the world’s largest car maker in terms of sales) of Germany were predicted to be the third largest car after China and the United States by 2020. It owns less than 1% of the market.Sales of about 3 million cars are stagnant instead of states with annual sales of 5 million

Growth has slowed to 3.6% in the last decade, but 10 years ago it was 12%. Ford’s withdrawal marks the end of India’s dream for US automakers. Analysts and executives said foreigners were terribly misunderstanding India’s potential and underestimating the complexity of its operations. In a vast country that rewards domestic procurement. Many could not adapt to the preference for small, cheap and fuel efficient cars that could hit bumpy roads without the need for expensive repairs.

In India, 95% of cars are priced at less than $ 20,000 and the tax on small cars is low, so heavy car makers for the Western market include Japan’s Suzuki Motor Corporation (the controlling shareholder of Martis Suzuki India). It was also difficult to compete with small car experts. Analysts said Hyundai Motor in South Korea was the only foreign automaker that had invested alone in India over the last 25 years, largely because of its broad portfolio of compact cars and what it knows. .. Ravi Bhatia, Indian President of JATO Dynamics, said: , A market data provider for the automotive industry. Some of Ford’s failures can be traced back to the mid-1990s when they drove to India alongside Hyundai.

Whereas Hyundai entered the market with its small, affordable “Santoro,” Ford offered the first “Escort” saloon in Europe in the 1960s. The price of the escort shocked the Indians who were accustomed to Martiszuki’s more affordable prices. LMC analyst Ammermaster said the narrow product range makes it difficult to take advantage of the appeal gained by the best-selling EcoSport and Endeavor Sport Utility Vehicles (SUVs). “Many global brand struggles have always met Indian prices because they have brought global products developed for mature markets in a high cost structure,” Master said. -Low tax rate for cars less than 4 meters (13.12 feet) in length 2000

As a result, Ford and its rivals produced India’s unique sedan of less than 4 meters, which ultimately disappointed sales. JATO’s Batia. Ascending and Descending Ford had surplus capacity at its first Indian plant when it invested $ 1 billion per second in 2015. With India as its export hub, it planned to increase its market share, which is expected to reach 7 million units annually by 2020. 9 million units by 2025. However, sales never continued and overall market growth stagnated.

Ford currently uses only about 20% of its annual production capacity of 440,000 units and has planned to produce compact cars for emerging markets in India to take advantage of its surplus capacity, but the plan has been shelved. I made it. As global consumer preferences shift to SUVs, the cost structure will change in 2018, as in 2016, and the following year, a joint venture with local peer Mahindra & Mahindra Ltd will begin to reduce costs. Did. Three years later, in December, the partner abandoned the idea. Ford has sunk $ 2.5 billion in India since its entry, burned another $ 2 billion in the last decade alone, and decided not to invest any more. I told reporters last week. “Unfortunately, you can’t.”

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Ford wakes up badly from that Indian dream

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