Cause and Consequence of Ford Automobile Exit from India in 2021

Abstract

American iconic automobile giant Ford Motor corporation has decided in September 2021 about curtailment of its operation and make an exit from Indian subcontinent. The decision was fueled by accumulated operating loss worth US$ 2 billion ((Rs 14,600 crore) in last 10 years and faster decline of market share. Exit of Ford will be reckoned as departure of third US automaker after General Motors and Harley Davidson left Indian market. Ford exit would cause estimated job loss of about 4000 workers resulting from closing down of 300 retail outlets situated across the country. Economic loss will be in tune with forward and backward linkages as automobile manufacturing having some bearing on complementary items such as steel, auto components, spare parts, tyres etc. Ford had never received overwhelming response since it ventured into Indian market in 1995. The joint venture between Ford and Mahindra & Mahindra didn’t work out which would have allowed former to manufacture cars at lower price. Ford had never been able to compete with market leader Maruti Suzuki which had been favorite among middle class and first-time buyers due to its affordability and impeccable service. Ford lost its appeal among price sensitive buyers when it had to hike price to keep up with its requirement for imported components. Post pandemic, market failed to provide signal of sustained profitability for US automobile manufacturer as purchasing power declined and uncertainty gripped the market for vehicles. Ford has decided to sell expensive cars in India through export and continue supporting dealers to service existing customers.