Ford, the iconic American brand, has been a regular feature of the Indian automotive industry for 27 years, being one of the first foreign brands to enter India in 1994. However, after years of iconic cars, the American brand has announced that it will be stopping domestic production of all Ford cars in India, with export production to end soon as well.
Ford’s exit has consequences for current owners of Ford cars as well as for the Indian automotive industry. We dive into the reasons behind Ford’s closure and what it means for current Ford owners. We’ll also answer whether you should consider buying a Ford used car in the coming years.
Why did Ford end production in India?
The news of Ford ending production in India may come as a surprise for many, but for those following developments in the automotive industry, this announcement has been expected for a while. According to Ford’s announcement, the closure has been directly attributed to the under-utilization of the American brand’s two plants in Tamil Nadu and Gujarat.
The two plants have a combined output of 4 lakh units per year but Ford as only been able to utilize a fraction of this capacity, with 80,000 units being produced. With a shrinking domestic portfolio and only EcoSport and Endeavour models making up sales, sustaining the Maraimalai plant in Tamil Nadu was not possible for Ford. At the same time, the new plant in Sanand, Gujarat, built to meet export demand is also not sustainable for Ford due to the significantly reduced global demand for Ford cars.
A Stagnant Portfolio
Ford started the last decade with strong momentum and new launches became regular for the American brand. The first generation of the ever-popular Ford Figo made its debut in India in 2010 while the trend-setting Ford EcoSport entered the country in 2012. The redesign of the Figo also saw the launch of the Ford Aspire in 2015.
These slew of launches ended in 2015 with the launch of the Ford Endeavour. While Ford possessed a value-oriented yet feature-rich portfolio of cars, new entrants and steady launches from rival manufacturers, saw the American brand’s sales gradually fall over the next 6 years. To revitalize their presence in India, Ford was hoping to enter into a joint venture with Mahindra to share platforms and engines while introducing new models in popular segments.
This JV had the potential to utilize Ford’s manufacturing capacity in India and for a few months, the deal seemed likely to be finalized. However, with no agreement between Ford India and Mahindra for the JV, Ford’s future in India became increasingly doubtful. Potential partnerships with Chinese car manufacturers also fell through, leaving Ford with no other choice but to end production.
How does Ford’s exit impact current owners?
While making its announcement, Ford has expressed its commitment to continue providing service and warranty support for existing owners of Ford cars. This means that current owners of Ford cars will be able to maintain their car effortlessly for the next 5 years. With all of Ford’s lineup being highly localized, parts availability will continue even after those 5 years.
A more pressing issue for many Ford owners is the resale value of their cars. In the immediate aftermath of the announcement, current owners of Ford cars have been selling their cars to make the most of the current resale value of their cars. This situation will change in the coming years, with concerns about part availability, the resale value of Ford cars will fall significantly in the next few years.
Should you buy a used Ford car in the coming years?
Ford’s closure comes as disappointing news for many prospective car buyers looking at buying a car with the American badge. Ford’s cars have established a strong reputation for emphasizing safety as well as essential tech features at competitive price points. The Ford Figo Titanium AT+ is a particular standout with 6 airbags as standard at under ₹10 lakhs on-road.
With diminishing parts and service availability as a concern, prospective buyers should not ignore the value that used Ford cars will now offer. As an example, prices for used Ford EcoSport (2013-17) Titanium models in Delhi start at ₹3.8 lakhs on Spinny while newer generation models start at ₹7 lakhs. These prices are expected to gradually decrease further, making a Ford used car particularly attractive for those looking for value in the used car market. Owning a Ford used car for the next 5 years should be worry-free for the most part, and as mentioned earlier, parts availability only becomes a major concerns after 10 years.
What is the impact of Ford’s exit on the Indian automotive industry?
The loss of Ford will have a direct impact on the component suppliers. While these suppliers will still get demand from current owners for maintaining their cars, the large volume component manufacturing will see a temporary hit with no new Ford’s being produced in India.
With the loss of Ford, rival manufacturers will be expecting an increase in their sales of their respective compact SUV and full-size SUVs. The Toyota Fortuner will see the most benefit as the Endeavour was the direct rival in the full-size SUV segment. In the compact SUV segment, Tata, Hyundai, Mahindra and Maruti Suzuki will see the most gain in this segment with their respective cars.
Ford’s Future in India
While domestic production is ending in India, Ford will still continue operations in India. Ford India will be leveraging its established dealer network to sell imported CBU cars from Ford’s global portfolio. This means enthusiasts will still be able to buy the Ford Mustang coupe and the previously announced Ford F150 Ranger Raptor. As the Endeavour is also built in foreign markets as the Ford Everest, a case could be made for this SUV to be imported if there’s enough demand for it.
For now, Ford is unlikely to resume domestic production until the American brand is ready to revisit its global strategy and increase its presence in the markets where it has withdrawn from. In the meantime, Ford enthusiasts will have to consider owning a Ford from the used car market to experience the build quality and safety of the American brand.
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