Indian automaker Tata Motors will purchase the western state of Gujarat’s Ford manufacturing facility for 7.26 billion rupees ($91.5 million).
The agreement comes as Tata increases its automobile production to satisfy demand.
Land, equipment, and all “qualified personnel” are all included in the agreement between Tata’s electric vehicle subsidiary and the Indian division of the American automaker.
Ford struggled for more than 20 years to make a profit in India before ceasing manufacture there last year.
Tata Motors claims that its manufacturing capacity is nearly at capacity, making the proposed acquisition timely and advantageous for all parties involved.
The parent company of the UK’s Jaguar Land Rover noted that yearly production at the Sanand factory would initially offer it a new capacity of 300,000 vehicles per year, with the potential to rise to 420,000.
According to Ford transformation chief Steve Armstrong, the news represents a significant advancement in Ford’s attempts to restructure its Indian business.
Ford announced in September of last year that it would close its auto facilities in India as part of a $2 billion move.
The choice would impact about 4,000 employees, the US automaker claimed at the time.
$2 billion in losses had been experienced by Ford’s activities in India over the preceding ten years.
The company’s decision to drastically scale back its efforts in India contrasts sharply with its prior goal of making the nation one of its largest markets.
It has been challenging for foreign automakers to be successful in India. Ford’s departure is merely the most recent in a string of resignations.
Several companies have abandoned producing in India in recent years, including General Motors, Volkswagen-owned MAN Trucks, and even legendary motorcycle manufacturer Harley Davidson.
Nissan, a major player in the Japanese automotive sector, decided earlier this year to discontinue sales of its Datsun compact car brand in the nation.
While GM and Harley-Davidson claim that these choices were made as part of their global strategy to exit specific countries, analysts also refer to India’s underwhelming revenues and lack of economies of scale.
India is still regarded as a car market with enormous potential, but sales have reached a decade-low due to a slowdown in economic growth, sluggish labor markets, increasing fuel prices, and pandemic-related disruptions.
The nation’s market for passenger cars has remained constant at 3 million units annually for the past five years.
In contrast, China purchases more than 20 million cars each year. However, some Indian automakers have noticed an increase in demand. On Friday, one of Tata’s competitors, Mahindra & Mahindra, claimed that demand for its popular sport-utility vehicles was outstripping supply.
As a result, its quarterly profits increased while passenger vehicle sales increased by 74 percent from the previous year.
The automotive division of the Indian multinational conglomerate Tata Group is known as Tata Motors.
Tata Motors acquired Jaguar and Land Rover from Ford in the UK in 2008 and combined the British premium automobile brands into one business.
The Tata Group owns numerous significant companies worldwide, notably Tata Steel Europe, which comprises erstwhile British Steel assets in the UK.
