Ford may sell Gujarat plant in emerging market strategy shift
NEW DELHI: Ford Motor Co. is in early discussions with at least one global automobile company to sell one of its twin factories in India, two people familiar with the matter said, underscoring a major shift in strategy for the automaker and its struggles in this intensely competitive market.
Ford is exploring the sale of its newest factory in the country, located at Sanand in Gujarat, said the people cited above. Both declined to be named as the talks are private.
The negotiations for the potential sale are being handled directly by Ford’s Asia- Pacific headquarters in Shanghai, the people said. They did not name the companies Ford is in talks with or say when the discussions are expected to conclude.
The Dearborn, Michiganbased automaker spent about $1 billion to build the Sanand plant, which opened in March 2015 and can produce up to 240,000 vehicles and 270,000 engines a year.
Ford’s moves are linked to the company’s likely realization that it may not need two factories in India in the future, said the first person cited above. Globally, Ford is also trying to trim its overall exposure in emerging markets, as part of the $11 billion restructuring process.
“The Sanand plant is a more than feasible option for any existing or new original equipment manufacturer looking for setting up capacity, as it is a very modern facility and close to the port. Hence, the logistics cost can also be reined in,” the person said. “It is very difficult to predict the final outcome at this level since these kinds of transactions take a long time.”
Ford builds the Aspire compact sedan and Figo hatchback model in Sanand that are mainly exported. Its other factory, at Chennai, opened in 1995 and has an installed capacity of 200,000 vehicles and 340,000 engines a year. Ford makes the Ecosport and Endeavour sport utility vehicle models in Chennai.
While the Sanand facility caters mainly to vehicle exports to more than 30 countries, Chennai is used primarily for supplies to the domestic market.
A spokesperson for Ford’s unit in India denied plans to sell the Sanand factory and said the company is continually working to expand its presence and product portfolio in India, including Sanand, where its vehicle and engine plants will continue to play their role as an export centre.
“We reject the rumours about exploring opportunities to sell the Sanand plant as mentioned by your sources in the industry. We find the assumptions by the sources both malicious but unfounded —choreographed to harm Ford’s reputation in Gujarat,” the spokesperson said in response to emailed queries. “Ford remains committed to growing its customer base and product portfolio in the world’s fourth-largest automobile market and will continue to make in India, for India and the world,” the spokesperson said. A sale of the Sanand plant will be a signal of the difficulties faced by Ford and General Motors Co. in India.