If reports are to be believed, TATA, under the chairmanship of Ratan Tata, is set to acquire the Maraimalai unit of Ford, the Michigan-based American automobile manufacturer.
TATA to acquire factories of Ford India
TATA group is in talks with the Tamil Nadu government to take over the Maraimalai Unit of Ford India in Chennai. The rumors about the possible acquisition surfaced when on September 27, Girish Wagh, the executive director of TATA Motors, had held a meeting with M K Stalin, the Chief Minister of Tamil Nadu. Following another meeting involving Tata Sons’ chairman N Chandrasekaran, CM Stalin and Thangam Thennarasu (Minister for Department of Industries, Tamil Nadu), the buzz regarding the acquisition has got stronger.
According to the sources, the announcement regarding the acquisition will be made by the Chief Minister himself. The TATA Motors’ spokesperson however did not confirm the news about the announcement.
The factories will add up to TATA’s capacity
Ford’s Maraimalai Nagar plant has a capacity to produce about 2,00,000 vehicles and 3,40,000 engines per year. When it was being operated by Ford, the plant produced Ford EcoSport and Ford Endeavour for India’s domestic market as well as for foreign exports to 30 countries. If the acquisition is successful, TATA Motors will gain access to 170 dealer partners and 400 showrooms servicing the erstwhile Ford India’s business. Moreover, it will positively impact the livelihood of more than 8,000 people.
The company is also reported to be in talks with authorities to acquire another manufacturing unit of Ford, which is located in Sanand, Gujarat. Currently, TATA has no manufacturing facility in Tamil Nadu, while it has one in Gujarat, located near Ford’s facility in the state.
Jaguar and Land Rover were massive successes for TATA
In 2008, TATA had acquired Jaguar and Land Rover for $2.3 billion. At that time, both these brands were witnessing extremely low sales figures, due to which Ford was incurring heavy losses. TATA changed its fortunes after the acquisition. TATA invested $16 billion in product creation, leading to a doubling of sales. The sales went high enough to propel the company to open up new factories and hire 20,000 more employees. Ford, the chairman of Ford Motors had personally visited Mumbai to thank the Tata Motors’ team.
Read more: Despite being America’s favorite, why Ford could never make a mark in India
Commenting on the success of the acquisition, Ratan Tata recently said– “In the beginning, morale was down and people were uncertain of their future with Jaguar Land Rover. There were also fears that Tata would likely close one of the three UK plants, and maybe even close everything and move all operations to India. All I did was ensure them that these were erroneous rumors and encouraged employees to focus on working shoulder-to-shoulder to rebuild these two venerable brands, which is exactly what they did”.
Ford’s drowning fortunes
Owing to Ford’s policy of selling cars suited for western markets in India, Ford had to withdraw from the Indian market after incurring a cumulative loss of $2 billion in the country; In 2020, the company was able to sell only 4,000 cars in India.
Moreover, even in global markets, Ford is not performing well. Its market share in China shrank to 10.7 percent in the first 8 months of 2018, compared to 12.2 percent during the same time period in 2017. In Europe too, Ford is struggling to keep its plants operated after the Brexit cut-off its supply chain from the European Union.
Read more: Not just India, Ford’s fortunes are sinking in the US, Europe, and China too
Tata Motors is currently the third-largest car manufacturer in India. It sells about 8.2 percent of cars sold annually in India. If the deal goes ahead, TATA is set to achieve its target of taking a double-digit market share. Moreover, the company’s emphasis on electronic vehicles production under ‘Make in India’ initiative is just an icing on the cake for its recent successes.
