Home Businesses Ford’s exit from India hits workers, dealers and customers.

Ford’s exit from India hits workers, dealers and customers.

Ford Motor’s decision to close its Indian operations was met with shock and defensiveness on Friday, after it became the latest American company to close its doors in a country with both tremendous possibilities and high hurdles.

The decision announced on Thursday would affect 4,000 employees as well as hundreds of dealers and a considerable number of customers.

More than $272 million has been invested in setting up dealerships that employ about 40,000 people, said Vinkesh Gulati, president of the Federation of Automobile Dealers Associations in India, which represents more than four-fifths of the country’s retailers.

Many Indians were expecting delivery of their new Ford vehicles on Friday, the day of the Hindu festival of Ganesh Chaturthi, the birthday of a god worshiped as the harbinger of good things and a symbol of prosperity. Now, selling those cars could become difficult.

“The first priority is service, but when a company exits, whatever they may say for confidence building, no comment will ring true because customers are scared,” Mr. Gulati said in a telephone interview.

Ford is the latest prominent American vehicle manufacturer to leave India, following Harley Davidson which exited in the winter of 2020 and General Motors, which quit the local market in 2017.

Global manufacturing giants had long looked at India’s growing middle class as a market to grab. They had also been enticed by the country’s cheap labor and promises by Prime Minister Narendra Modi to cut red tape and make business easier to conduct.

Though the government has made some progress, it has struggled to remove barriers and construct a robust ecosystem. Industry experts say a lack of demand has discouraged the private sector.

The economy has also taken a hit from the pandemic. India recently posted strong economic growth on paper, but the official figures benefited from a sharp contraction last year when the government locked down the economy to contain the coronavirus.

Economists say India will struggle in coming years to make up the growth lost from the pandemic. Real household income fell last year, as unemployment grew and tens of millions of middle-class Indians fell into poverty.

Ford plans to phase out its plants in India. A vehicle assembly plant on its western coast in Gujarat will be shuttered by the fourth quarter of 2021 and another for vehicle and engine manufacturing in the southern Indian state of Tamil Nadu by the second quarter of 2022. The company hopes to restructure its operations around electric vehicles and niche markets, like providing imported Mustangs to India.

Government officials on Friday defended India’s business environment in the local media, saying other automakers have prospered. Still, industry figures showed that demand for new vehicles has weakened in recent years, and automakers are dealing with industrywide challenges like a tight market for computer chips.

Source link

RELATED ARTICLES

Tim Cook Faces Surprising Employee Unrest at Apple

SAN FRANCISCO — Apple, known among its Silicon Valley peers for a secretive corporate culture in which workers are expected to be in lock...

Prosecutor in Geneva Drops Criminal Inquiry in $2 Billion Art Dispute

The Geneva public prosecutor’s office has dropped its criminal investigation of Yves Bouvier, a Swiss businessman who has been embroiled in a long-running battle...

Two Men Plead Guilty in Pelvic Mesh Implant Scheme

A Florida doctor and a medical consultant pleaded guilty this week to federal charges arising from a scheme to pressure hundreds of women to...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Abdelaziz Bouteflika, Algeria’s Longest-Serving President, Dies at 84

ALGIERS — Abdelaziz Bouteflika, who joined his country’s fight against French colonial rule in the 1950s, rose to foreign minister at 26, went into...

France is ‘vital partner & oldest ally,’ US says as Australia ‘regrets’ recall of French envoys over nuclear submarine deal — RT World News

Washington has insisted that Paris remains a “vital partner” after France recalled its ambassadors from the...

The Secret Talks Behind the U.S. Deal That France Called a ‘Betrayal’

By that time, the Australians knew the program was dead.The French ambassador to the United States, Philippe Étienne, said in several interviews that he...

F.D.A. Panel Recommends Pfizer Boosters for Those Over 65 or at Risk

Dr. William C. Gruber, a senior Pfizer vice president in charge of vaccine development, suggested that if the United States does not follow Israel’s...