Ford Motors’ decision to shut down its Indian operations was greeted with shock and a defensive stance on Friday, after it became the last US company to close in a country with both huge opportunities and obstacles. students.
The decision announced Thursday would affect 4,000 employees as well as hundreds of dealers and a considerable number of customers.
More than $ 272 million has been invested in establishing dealerships that employ around 40,000 people, said Vinkesh Gulati, president of the Federation of Automobile Dealers Associations in India, which represents more than four-fifths of the country’s retailers.
Many Indians were awaiting delivery of their new Ford vehicles on Friday, the day of the Hindu festival of Ganesh Chaturthi, the birthday of a god revered as the harbinger of good things and a symbol of prosperity. Now, selling these cars could become difficult.
The first priority is service, but when a business leaves, whatever it says to build trust, no comment will ring true because customers are afraid, Gulati said in a telephone interview.
Ford is the last major US automaker to leave India, following Harley Davidson which was released in winter 2020 and General Motors, which left the local market in 2017.
Global manufacturing giants have long viewed India’s growing middle class as a market to seize. They had also been attracted by the country’s cheap labor force and Prime Minister Narendra Modi’s promises to cut red tape and make doing business easier.
Although the government has made progress, it has struggled to remove obstacles and build a robust ecosystem. Industry experts say a lack of demand has discouraged the private sector.
The economy has also been hit by the pandemic. India recently posted strong economic growth on paper, but official figures benefited from a sharp contraction last year when the government locked down the economy to contain the coronavirus.
Economists say India will struggle in the years to come to make up for lost growth due to the pandemic. Real household income fell last year as unemployment rose and tens of millions of middle-class Indians fell into poverty.
Ford plans to gradually close its factories in India. A vehicle assembly plant on its west coast in Gujarat will be closed by the fourth quarter of 2021 and another for vehicle and engine manufacturing in Tamil Nadu state in southern India, d ‘by the second quarter of 2022. The company hopes to restructure its operations around electricity. vehicles and niche markets, such as the supply of imported Mustangs to India.
Government officials defended India’s business environment in local media on Friday, saying other automakers have thrived. Yet industry figures have shown that demand for new vehicles has weakened in recent years, and automakers face industry-wide challenges, such as a tight market for computer chips.
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