Stung by an accumulated loss of $2 billion due to a rapidly thinning market share, On Thursday, Ford announced the closure of local manufacturing in India. A senior government source confirms the decision in no way reflects on the business environment in India and is rather linked to operational issues, as Ford’s fortunes are sinking in the US, Europe and China as well.
- On Thursday, the iconic US auto giant had to shut down its local manufacturing in India.
- The decision in no way reflects the business environment in India.
- Statistics reveal its significant fall in other countries like the US, China, and Europe.
Ford’s fall in the Indian Market
Ford entered the Indian market in 1996 with an initial investment of $ 1 billion, the iconic US auto giant has so far invested over Rs 12,800 crore in India. Struggling for 25 years, it has failed to make headway in the highly competitive Indian market. Its market share never crossed the low single digits and at the time of its exit, its share was reportedly down to under 0.5 per cent. Ford had to pay the price of exit for its lack of innovation and series of outdated designs and technologies which failed to enthuse the buyer. Moreover, Ford did not offer a variety of options even for the affluent section of society. The two years of the Covid pandemic were perhaps the final nails in the coffin. With the Indian car market shrinking from a peak of over 4 million units to just over 3 million units in 2020-21, and sales continuing to slide, the outcome was evident.
Ford’s Home ground performance
Ford faced a decline in vehicle deliveries for the third consecutive year within the U.S. car market. The company reacted to the downward trend with the decision to phase out its offering of slow-selling, non-electric passenger cars, with the goal to increase profitability by a recreated product line-up. Passenger cars accounted for 14.4 percent of Ford’s U.S. retail sales in 2019, down from almost 20 percent in 2018. Moreover, U.S. sales of Ford Motor’s new vehicles last month declined by 33.1% from a year earlier due to an ongoing global shortage of semiconductor chips that’s wreaking havoc on the automotive industry. The problem is expected to cost the global automotive industry $110 billion in revenue in 2021, according to consulting firm AlixPartners.
Ford’s Shrinking China Business
The American carmakers are losing ground in China’s competitive market, as per an industry body their problems are mostly tied to a lack of competitiveness rather than the trade war. The market share of U.S. brands fell to 10.7 percent in the first eight months of 2018 from 12.2 percent a year earlier, according to the China Association of Automobile Manufacturers.
China is Ford’s second-largest market where car retail sales have dropped for three straight months with economic woes threatening to end Ford’s almost three-decade expansion in the Chinese market.
Ford in Europe Market
Ford sales are also under threat in the European Union. Moreover, the UK’s withdrawal from the European Union disrupted Ford’s supply chains: three plants operate in the UK which have now been cut off from assembly locations in the EU. Initially, The UK was traditionally Ford’s largest market in Europe. Wholesales in the UK came to around 367,000 units, and dealerships sold about 236,000 vehicles to end customers in the United Kingdom of Great Britain and Northern Ireland in 2019, where Fiesta and Focus cars are among the best-selling models.
Ford might seem be a favourite of the American patriots and people in the United States but its strategy has significantly failed in its home ground followed by its biggest markets in India, China and also in Europe for which it has to pay a heavy price.