THE AFTERMATH OF A SUDDEN GOODBYE
Automaker Ford Motor Company has decided to pack up and ship out from India, and while this decision was long speculated, it has left the auto fraternity in utter shock and chaos
IN THE PAST DECADE, VARIOUS BIG SUCH AUTOMAKERS GENERAL MOTORS, HARLEY-DAVIDSON, AS FIAT, AND MOTORCYCLES AUTOMOBILES UM PREMIER FAREWELL TO HAVE BID AUTO THE INDIAN MARKET
We would request you to kindly share with us the broad contours of the compensation structure, which you may have planned by now for compensating our members. VINKESH GULATI, President, FADA, wrote in a letter addressed to Ford India President and MD
India is the world’s fifth largest auto market — growing fast, but not without encountering endless challenges. Even as many OEMs (original equipment manufacturers) see the Indian market as an oasis, not everyone can chart out a path towards definitive success. Case in point — Ford Motor Company, which has had a challenging time here leading to accumulation of operating losses of more than $2 billion over the past 10 years. The US automaker recently announced that it will shut both its manufacturing facilities in Sanand, Gujarat and Chennai, Tamil Nadu by the fourth quarter of 2021 and the second quarter of 2022, respectively. The announcement has lead to chaos and anxiety for Ford dealers and their 40,000 employees, around 4,000 factory workers and customers as well as the auto industry bodies. While the carmaker had assured that it will compensate its dealers and support existing customers in the country, assurances alone won’t likely calm frayed nerves.
WHAT DOES IT MEAN FOR FORD CUSTOMERS?
While sales of existing India-made models like Figo, Aspire, EcoSport, Freestyle and Endeavour will end once dealer stock runs out, the company has assured that it will continue supporting its customers by closely working with dealers. It will also continue offering after-sales services, aftermarket parts and warranty coverage. However, the company doesn’t plan to completely stop selling its products here. It is looking at offering high-end and niche products like Mustang via the Completely Built-up (CBU) route, and even its hybrid and all-electric vehicle(s) in the times to come.
INSECURE DEALERS AND FACTORY WORKERS
Ford dealers have invested about ₹20 billion in building the outlets while many may not have even reached the break-even point in the business. They hold about 1,000 vehicles which amount to about ₹150 crores via inventory funding from reputed Indian banks. Since Indian consumer law makes dealers liable after a manufacturer exits, they also face potential legal complications,
Federation of Automobile Dealers Associations (FADA) president, Vinkesh Gulati, told Bloomberg TV.
Thus, Gulati has now sought clarity from Ford on how it plans to compensate its dealer network in the country. “We would request you to kindly share with us the broad contours of the compensation structure, which you may have planned by now for compensating our members,” he wrote in a letter addressed to Anurag Mehrotra, Ford India President and MD, PTI reported.
Meanwhile, Ford factory workers fear being left in limbo. Workers at its Tamil Nadu facility have reportedly sought assistance from the state government to safeguard their jobs. There have also been isolated protests against the company with many demanding interventions from the government. The union of the factory urged the company not to close the facility or find alternative ways to secure the livelihood of the employees.
NEED FOR STRONG SUPPORTING LAW
Ever since Ford announced that it will stop making cars in India, FADA has urged the Centre to pass a law to protect the dealers from such unforeseen decisions taken by foreign OEMs. The auto dealer body wants the government to pass the Franchisee Protection Act as soon as possible, which will provide a cushion to dealers in case any OEM decides to shut shop and ship out.