Ford’s India factories near end of road, talks on with Ola for contract manufacturing

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(This story originally appeared in on Jul 15, 2021)

Ford is looking to wrap up its Indian manufacturing operations and may take a call on its Maraimalainagar and Sanand factories later this year. Towards this, the American automaker has been in talks with various car companies for both contract manufacturing and/or sale of its Indian factories, the latest with Ola, which could use Ford’s factories to build electric cars.

An Ola spokesperson refused to comment, while Ford India’s spokesman termed it speculative: “We would not like to comment on speculations. We continue to assess our capital allocations in India and expect to have an answer in the second half of this year,” Ford India’s spokesperson said.

Ford went slow with their contract manufacturing discussions for two years because “talks were at an advanced level with Mahindra & Mahindra” and was looking at “cross badging and new product alliance plans with the Indian partner would take care of Ford India’s 400000 units per annum capacity at Maraimalainagar and Sanand,” said a source.

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After the talks with M&M fell through, in January, Ford initiated the process all over again to identify partners including MG, Changan and Great Wall. Changan and Great Wall though evinced preliminary interest, but dropped their India plans (for now) because of geo-political tensions at the Indo-China border. The passenger vehicle market has shrunk sharply leaving manufacturing capacities under utilised, across manufacturers.

“The uncertainty in the long-term growth prospects of the auto industry has resulted in serious challenges for Ford, including capacity utilization,” said another source.

Ford can make cars and engines across its two factories, one in Chennai and another in Sanand, Gujarat. The Chennai plant can make two lakh cars and 3.50 lakh engines, while the Sanand facility can manufacture 2.4 lakh cars and assemble 2.7 lakh engines. The struggling automaker sold less than 2,800 cars in June.

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