U.S automobile major Ford motors is shutting down operations in India and has sold its manufacturing plant in Sanand, Gujarat to Tata Motors. The deal is agreed for $ 91.5 million between Ford motors and Tata motors subsidiary Tata passenger electric mobility. It covers land assets and all eligible employees as well. Indian car maker Tata motors already owns marquee brands like Jaguar and Land Rover with its manufacturing facilities across the world.
Currently, Tata motors manufacturing capacity is nearing saturation. It is one reason why Tata motors is in interested in buying Ford’s plant. The acquisition is timely and win-win for all stakeholders. Tata Motors said that the acquisition of Sanand plant will unlock the manufacturing capacity of 300,000 units every year. It could increase this capacity to 420,000 by the end of this year. Ford had less than 2% of Indian passenger vehicle market when it stopped manufacturing in the country last year. Having struggled for more than two decades to generate profits, Ford motors finally decided to pull the plug on India operations last year which cost Ford $2 billion in losses.
Many foreign vehicle manufacturers have shut operations in India recently such as General Motors, Volkswagen-owned MAN Trucks and even Harley Davidson. India’s passenger vehicle market has seen stagnation of growth for the last decade at around 3 million units sold each year. Due to weak labor markets, higher fuel prices, pandemic related disruptions and general slowdown in economic growth has decreased vehicle sales in India. However some market analysts still see India as a car market with great potential.