India is that country where the rich keep getting richer and the poor get poorer. The Indian auto market unfortunately follows in that tradition as well. Maruti, Hyundai they keep getting bigger and all the other smaller players well they just keep getting smaller just keep getting pushed into the corner until they finally have to leave the Indian market. That’s exactly what has happened to Ford. They made the announcement that their operations for the Indian market are taking a big downturn. Ford will be winding up operations in India.
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The production of all their made in India products now comes to a complete halt.
Ford will now move to a CKD, SKD, CBU only operation and that is it, they’re not going to be selling anything else apart from that. No more EcoSport, no more Aspire, no more Figo, no more Endeavour. Before we get to what does that mean for you, let’s try to take a look and analyse why did Ford fail in the Indian market. We have to sort of go back rewind all the way to the Escort, the Ikon.
It got them into a bit of a chicken and egg situation not just those cars but even cars like the Fusion, the Mondeo. These were great drivers cars they promised a lot, they had great engineering and they were accepted quite well by the Indian market as well. But then soon the customers realised that the cars were expensive to maintain. The spares, the service cost they were quite high, they were not as easy to live with as the other car makers in the market at that point of time.
What that led to was cars coming into the resale market by people who couldn’t afford to keep them anymore. That resale value for those vehicles dropped significantly that in turn had an impact on the sales of the new cars from the brand. Because people had now perceived Ford to be a very expensive brand to own and maintain. That sort of led to all their sales diminishing both in the resale as well as the new car market. This is why Ford will be winding up operations in India.
No diverse portfolio to attract customer
Then game cars like the Figo and the EcoSport where they tried to address this concern, they tried to prove to the Indian market that owning a Ford wasn’t as difficult. In fact they achieved that quite well. But by the time they achieved that they didn’t have fresh products in the portfolio to keep attracting this buyer. By the time they got there made for India products ready they didn’t have anything else in the different segments that they were presenting.
In fact that is something that is lacking for a lot of car makers. One thing to learn from car makers like Maruti and Hyundai is that they have something for every price point. They have a diverse portfolio and that is what gives the customer a lot of options to choose from one that is perfectly fit for their pocket size. This is where car makers like Ford just couldn’t strike that balance. By the time they could get their first mate for India product ready, the market was already moving on. They were already looking at alternatives and Ford didn’t have any.
Partnerships & alliances – would’ve worked?
Then we fast forward to the current era where everyone is looking at alliances. The whole Auto world is looking at alliances, partnerships to be able to sustain this turning point where we are moving from internal combustion engines to electric vehicles, connected technologies. That is why you see so many alliances forming. Everything from something as big as the Volkswagen group to the Kia and Hyundai partnerships to Suzuki and Toyota.
Also to even something like Bajaj KTM or Bajaj Triumph everyone’s trying to have these partnerships, get alliances that can help make a sustainable business model. This is where Ford lost the plot completely. The drawing product lineup essentially meant that no one was really interested in coming to Ford for any technology or any kind of product or platform sharing. At the same time Ford couldn’t really tie up with any manufacturer to borrow technology, to borrow sustainable manufacturing, low-cost engineering. That is where things just started falling apart.
Of course alliances with Tata or Mahindra were possible that was sort of a ray of hope but that didn’t work out at all. Also even if the alliances would have happened we don’t know what Ford would have gained out of it. Because history shows that both Tata and Mahindra whenever they’ve entered jvs they have been the only beneficiaries not the other car maker. So, we don’t know even if that would have worked difficult to say. This is why Ford will be winding up operations in India.
If you are a Ford customer what does this announcement from the brand mean for you.
Ford has already assured that they will continue supplying spares and service to the Indian market for the forceable future. With almost 10 lakh Ford cars still flying the Indian roads it is a big business opportunity not just before existing Ford dealers but also for Ford suppliers to be able to continue putting spares into the Indian market and making money out of it.
While Ford will have some control over their own service centres and also the spares that they are putting out into the market to ensure that they don’t come at a premium, they don’t really have any control over the third-party solutions. So, the good news is there will be solutions if you are already a Ford owner or Ford customer. But the bad news is, it is going to get difficult with time. This is why Ford will be winding up operations in India.
Should you sell your Ford tomorrow
We don’t think you need to rush into that because the resale value is going to drop but it’s not going to be an overnight change. Of course, if you are an owner of a not so popular Ford model maybe something like the Aspire or the Figo we think it’s time you need to start planning your next car purchase.
Should you buy a new Ford at this point in time?
The popular models like the EcoSport or the Endeavour buying them at a discounted price may not be such a bad idea. Because like we said Ford is going to continue providing the spares and the support that is required. Again these two models have sold in big numbers so finding the spares and the support is not going to be that difficult.
But something like the Figo and all of its variants buying those may not be a good idea even if they come at a good price. These are excellent cars, they drive very well but things are going to get difficult especially for these not so popular models. So, the best avoided after today’s announcement.
What if you have recently bought a Ford?
Remember Ford is still not exiting the country. The company is still going to be here, they are still going to have presence in the Indian market, they are also going to have brick and mortar outfits. In terms of dealerships and service centers so warranty is something that they will certainly honour. That’s not something that they’re gonna run away from but if you recently bought yourself a new Ford and you do not have extended warranty we suggest you get that while you can.
What happens to all the Ford dealers?
We think they are going to feel the biggest brunt of it all. Imagine the amount of cancellations that are going to happen from tomorrow. People have also booked Fords for the upcoming festive season. It sort of also shows that Ford are still the nice guys here. Because they’re still thinking about the customer first and then their dealers or their own outfits. Imagine getting your Ford vehicle delivered for the festive season and then this announcement coming in a week or two from your delivery that “Ford is finally winding up its operations in the Indian market” that would leave you with such a bad taste.
So, Ford has made this announcement at a very right time let’s put it that way. But you’ve got to feel bad for the dealers because this isn’t the right time for them. At the moment there are about 174 dealers in the country with 391 touch points. They’ve made investments of over 2,000 crore and have 40,000 employees. What happens to all of this remains to be seen. They still have an inventory a combined inventory of over a thousand cars that amount to over 150 crore rupees. Getting that inventory of their hands is not going to be an easy affair.
Service is going to be the only income for all of these dealers going forward. Because even with Ford’s CBU operations, the numbers are not going to be that big. So, how Ford handles this whole situation that remains to be seen.
What will Ford do now?
Right now they are going to be relying completely on the semi-knock-down kits, completely knocked down kits, completely built units. Essentially vehicles that are going to be imported. There is the rule in the Indian market where you can import up to 2,500 units of a particular vehicle with no homologation required. That’s the rule that Ford is going to try to bank on. That is where we’ll start seeing vehicles like the current Mustang. Its new avatar, we’ll see the Mustang Mach-E maybe the right-handed Bronco, the Ford Cougar, the Fiesta ST, the Focus. But you get the point. All these imports from that diverse portfolio are going to be their only point of focus at the moment.
So, even though Ford says that they are not really exiting the country yes, technically they are in but practically it is the end of the road for the blue oval for the masses. Because all these CBUs, all these imports are not going to amount to much. The more bread and butter products, they’re out of the market. They’ve ceased to produce them that is the end of it all. But all said and done, it is a sad day indeed.
Finally, Ford thank you so much for giving us some of the best drivers cars that the Indian market saw. It’s really a sad day. We really hope that there is some ray of hope and some way that you can bounce back. This is why Ford will be winding up operations in India.