Ford India will shut down its Sanand and Chennai manufacturing units due to low sales volumes and no future growth prospects.
Ford Motor Company will cease operations in India after incurring losses of to the tune of $2 billion over 25 years. It sees no path to profitability in India. It has become the second carmaker after General Motors to leave a key growing market dominated by Asian competitors including Maruti Suzuki, Kia, and Hyundai.
Ford's decision comes after years of attempting to gain the trust of Indian consumers and become profitable. Ford entered the Indian car market around 25 years ago but today it has a market share of less than 2 percent in the passenger vehicle industry.
Ford said in its statement that it has incurred operating losses of more than $2 billion in India over the last decade and that demand for its new cars has been weak.
"Despite our efforts, we could not find a way to achieve long-term profitability," stated Anurag Mehrotra, CEO of Ford India, in a statement.
"The decision is reinforcing by years of accumulated losses, chronic industry overcapacity, and an absence of projected growth in India's car market," he said.
Ford joins other American automakers including General Motors and Harley-Davidson, in leaving India, a market that once promised exponential development.
Ford India intends to close its Sanand plant in the western state of Gujarat by the fourth quarter of 2021 and stop car and engine production at its Chennai plant in southern India by 2022.
The American carmaker said that it will continue to import certain Ford models and help dealers in serving existing Indian customers. Approximately 4,000 workers are expected to lose jobs by the company's decision.
Ford decided to stop manufacturing in India after failing to reach an agreement with local carmaker Mahindra & Mahindra on a joint venture that would have enabled Ford to continue making cars at a cheaper cost than it does today but would have required Ford to cease its independent operations.
The company said that the decision to stop production took after examining various other possibilities, including partnerships, platform sharing, contract manufacturing, and the potential to sell its production plants, which is currently under review.