[motorhead123]

Originally Posted by SkylineGTR

I used to wonder why Dodge doesn't sell their vehicles in India. I guess this explains it. This will make it harder for any future American/European brands to enter India and do business. If Ford with its 20 year presence can just wrap things up and walk away, how can we trust anyone other than Maruti/Tata/Hyundai?

Genuine question: Can you explain what government policies led to Ford's exit? Would be really interested to know.

My understanding on this subject:

US based car makers have a different operating model and cost model than the rest in the industry. In the US, Ford and GM rely heavily on mid-size and heavy duty trucks like the F-150, 250 etc. Those are volume sellers with F-150 alone selling 40,000 units a month and have high profit margins. Ford literally abandoned the sedan segment in the US (except Mustang) sometime ago due to thin profit margins and high competition from Asian car makers such as Toyota, Honda, Nissan and Hyundai.

Also the tax structure in the US, regulations make it more favorable for these car makers and to stay profitable. The playing field in India is completely different, consumer preferences, cost structure, quality expectations, safety standards to name a few. Add to this, the high GST adds a significant portion to the price of the car itself. My understanding on the tax is that nearly 50% of the on-road price of the car goes towards taxes, registration fees in India which is not the case in other markets.

Ford came to India with heavy expansion plans and built heavy capacity assembly plants to make 2 Lakh units each year. However I read they were only operating with less than half the capacity in recent years. The faltered strategy to understand the Indian market combined with high taxation is what I believe brought Ford to make this exit plan. Instead of plainly looking this as just Ford's issue, it would be good to look at the challenges in bringing foreign investments to India which directly translates to economical growth, jobs creation etc. in the future. This would stiple competition, innovation, future investments, economy and every aspect of a country's progress.

My assertion is that the current economic policies have a major role to play in these kinds of exits other than a failed company looking to abandon the market.

[SYAM]

It is disheartening to see another pioneer automobile company leaving our country. I've thoroughly enjoyed my Ecosport petrol in the last three years and was hoping to replace it with another better model from Ford after some years.
What I am really concerned about now is the service. Whenever we faced a hurdle at the service centre, an e-mail to Ford India used to help us settle the matters easily. Now that head is gone and we might end up at the mercy of whichever remaining service dealers.

[eternalck]

Originally Posted by speedfreak01

Just today when it was raining in Delhi at night. I decided to go on a short drive and thats when I spotted a black unregistered Ford Endeavour just cruising on the ring road. My first thoughts were, what the owner must’ve felt when he had first read the news instead of admiring the black beauty. The car definitely looked surreal driving slowly in the light drizzle.

I believe an unregistered car cannot be delivered to a customer in Delhi- please correct me if I’m wrong.

We took delivery within a few hours of the announcement.

While the initial few minutes of the news were a downer; the sheer pleasure of stepping into (or onto) this beauty today is enough to displace any and all such sadness. The thing is built to last- at least it feels like it for sure.

We are still sad for the staff at the dealership who have got notices though. I hope they sail through these tough times and come out strong.

[SLK]

Originally Posted by GTO

Ford, GM, Harley, Fiat (as a brand), MAN Trucks are all gone. VW totally reduced its India commitment, Nissan has been in the ICU till very recently, while Audi took Nissan's place in the ICU. We need a market where 10 players have 10% each & fight fiercely everyday, not 2 players having 70%.

We need a market? - "We need to "make" a market" like that. Businesses need to earn, and that is their objective, if the market can't provide that and the buyer can't differentiate between safe and sturdy vs gizmos, the market is not a market for the manufacturers from the west.

It is indeed sad to see them go and if our buyers do not get the courage to try different things and take risks (by buying safer vehicles), next will be VW.

The Asian brands will always win with Gizmos (and reliability because of simpler mechanicals), that's their style and they work the same way in the west too! but buying decisions are not based solely on this.

Ultimately, it is a loss to the buyers, but I guess, India is unique in many ways and this may well be the equilibrium. Like Nepal and Pakistan, we will open up to import CBUs for common man!, because our country will only have Korean, Chinese & Indian brands.

I'm happy if VW continues to sell CKD imports or even CBUs, but just stay in profit so that they don't have to flee and take away choices, even if they come at a cost.

Look at team-bhp, how much brand bashing do we do! but as enthusiasts we still go and buy the same cars (we find reasons from heart to convince the mind, even if our own written review reads differently). BUT the readers (google search researcher-buyers) rely on our bashing and avoid these brands, we would have turned away 1000s of buyers from these brands, calling them unreliable, expensive, outdated, etc.

[vibbs]

From Ford's perspective, how important is the Indian market for them?

Yes, it is the fifth largest market by number of vehicles sold annually. But to put it in perspective, it pales in comparison top three. In my opinion, from their point of view there was no reason to keep investing in a loss making business trying to appease a market which had different expectations compared to the traditional value proposition of Ford vehicles.

Yes they could have done things differently, but things are as it is. It's not possible to sustain in Indian market without manufacturing in India and the market size as well as their ability to penetrate it simply did not justify their efforts any longer.

[Small Bot]

Actually, Ford leaving the country makes extremely sound business sense. Nobody can say this was unexpected. Their vision has changed, they do not have much to show for the decades spent here and the most logical step is to cut their losses and focus on their key markets and key products - North America and SUVs.
Just that they could have had a better exit strategy, w.r.t dealers and other staff.
These staff and dealers will soon find their own ways to survive, most probably by joining other expanding dealer networks like Tata Motors.
I just wish Ford India compensates them a bit for their losses.

[nitkel]

All things said, I don't believe it had anything to do with Ford not having the ability to find enough buyers, and subsequently enough sales to justify having a presence here. All ford cars which were accepted by the mass market were well-rounded as a product, be it the Fiesta, Figo or the Ecosport. They just had to invest in making updates at reasonable timeframes like Hyundai to keep the cars relevant and guarantee continued sales, which they never did! Only Ford knows why they forgot the basic principles of generating sustainable demand to keep the cash registers ringing. The Aspire/new Figo was also a step in the wrong direction and the market rejected those accordingly. It is as if they never really understood why people bought Fords in the first place! Simply put, a rather confused brand IMO with an absolute lack of vision, and they paid the price for it.

[RGK]

Originally Posted by balenoed_

But why only for 10 years? Shouldn't it be for 15 years, which is what the vehicle registration validity is up to.

Our context of the talk was about the minimum period and not specifics. Yes, Ford should support 15 years from the date of their last sale.

[landcruiser123]

With big investments in EVs and self driving, I'm not surprised Ford is leaving India. Barring the Ecosport, their market performance has been rather mediocre for more than a decade now.

After Indonesia, and Japan, there was no doubt that India was next on the list.

Originally Posted by SkylineGTR

I used to wonder why Dodge doesn't sell their vehicles in India. I guess this explains it. This will make it harder for any future American/European brands to enter India and do business.

Well, the Americans love to impose their version of what an automobile should be. They have to learn to cater to local tastes to be successful abroad.

Ford is somewhat an anomaly. Unlike GM (sells dated Daewoo designs) and Chrysler(recently sell Fiats after the FCA merger), their small car portfolio (eg Fiesta) are favorites in EU for many years. Somehow, they failed to replicate the same success in India.

[vibbs]

Originally Posted by SLK

.

It is indeed sad to see them go and if our buyers do not get the courage to try different things and take risks (by buying safer vehicles), next will be VW.



.

Not nitpicking. But I disagree to this premise of blaming the buyers for the state of affairs. Buyers are buyers and they make up the market. It is not made up of just the miniscule set of team-bhp members. Market is made up of a large number of other buyers who have different drivers for their buying decision as compared to us.

It is the responsibility of any company trying to enter a market understand this and map their products to the prevailing demand. Shaping the demand, well very few companies have the clout to do that. In the Indian context with 50% and 25% market share respectively, it is Maruti and Hyundai that can do this.

Ford had a classic case of category creation when they created Compact SUV segment in India with Ecosport. But the moment the Asians entered, Ford just could not keep up.

Similarity, if VW does not make money in India or sell cars in India it is solely because of their inability to map their products to the market demand. In the end market exists as it is. Your inability to provide for it or even shape the demand is not the market's fault, but rather the ineptitude in your marketing and product development departments.

[SinghShu]

I think there were clear sign that the exit was eminent. This could also be seen from the dismal ford sales figure for last month. Most of the Ford cars sold poorly, and that's just consumers way of reacting to all the news/grapevine that was floating in the market.
Dealerships holding off investments was another story in the same epic!
Having said that, it's ultimately a loss for indian consumers. Ford cars usually had a solid build with decent driving dynamics. We have an aspire in our garage and the handling of that car brings smile to your face. Same was the case with our earlier figo which stormed the market once upon a time.
Lessons from this for others: unless you are a Maruti, invest in market. Newer models, facelifts, understanding the customers beat help. Guess Ford missed a few things here and could never catch back!

[stallmaster]

I have been associated with various ancillary parts manufacturers of different companies(I supply them machines and maintenance), and according to them a huge part of the reason why Ford packed its bags is the tax structure. But then again they won't say that in open because the regime isn't exactly friendly right now.

It's REALLY hard to make good, safe cars at the prices and margins like other manufacturers do(looking at you MSIL and Hyundai). Tata and Mahindra have various home turf advantages. After manufacturing, with the taxes added, the retail pricing has to come down to match up with the competitors and that leaves very little profit for Ford to even think about bringing other models to the market. Forget the various European Fiestas and Rangers.

It's a chicken and eggs problem right now in India. The government needs to put a check on its appetite for taxing the hell out of commodities to give a boost to employment and consumption. But if the government reduces taxation, its coffer-managers would be hard pressed to find the money for various cash transfer schemes, because it doesn't have the appetite to take loans instead and spend on infrastructure/social sectors. And in turn the businesses aren't feeling comfortable and confident enough to expand.

So according to the Ford, it's better they liquidate their operations here, salvage whatever they can and invest that liquidity into electric vehicle R&D in North America.

[vibbs]

Interesting. What exactly in the taxation affects Ford more than it affects others (assuming similar level of localisation)?

[RajeevSharma]

There are problems with regulations in India biggest of them being higher tax rates and RTO charges which inflate the price of vehicles beyond reach of a common man. It has also stunted the growth as carmakers increase the prices even further to make more money on lower volumes.
Even some car manufacturers are not helping their cause by learning a lesson or two or even taking early success to greater brand glory and sometimes faulty products (DCT of ford and DSG from Volkswagon) have killed hard earned goodwill. Group policies are also to be questions as to why a group enters India with 3 brands and not able to grow even one of them.

As a result common man gets less car for more money. The promised growth of this sector has not materialized and even there it is dominated by two players. Even Hyundai is now playing the price game by offering mediocrity at higer cost but they enjoy goodwill to do so and do a lot of research on product placement.

I own a Ford Fiesta AT and it has given me a lot of joy and over 200K of troublefree ownership. I was inclined to stay with form for upgrade but they did not have anything. It is sad them to see going out on a limp.

The govt should wake up and rationalize GST as it is a high value sale as well but we elect idiots after idiots. The loss of job and investment is going to have adverse effect. May be Govt can look at SaaS model to look to lower tax at beginning of a buy cycle and see what long term impact it will have on economic activity or revenue generation.

[anb]

Originally Posted by vibbs

Interesting. What exactly in the taxation affects Ford more than it affects others (assuming similar level of localisation)?

Toyota raised this point. They stopped developing new products for India and started to sell Baleno and Brezza instead. While Ford failed to do same with Mahindra. https://www.business-standard.com/ar...1500157_1.html