Tata Motors took over Ford India as US Auto Major exited India

Tata Motors took over Ford India manufacturing plant in Chennai which was decided in September last year 2021. The above news was one of the reasons the Tata Motors share price witnessed a rise in the 1st hour of trading on the Bombay Stock Exchange in October 2021.

There was an announcement that the former Ford India MD, Anurag Mehrotra had joined Tata Motors CV business. Anurag resigned from Ford on 24th September 2021, about 15 days after Ford had announced their India Exit. 48-year-old Anurag is presently the VP of Tata CV International Business & Strategy. 

Both TATA motors, as well as Ford India, have manufacturing plants in Gujarat. In Sanand, 40 km off Ahmedabad, these two plants can be found next to each other. From the Tata plant, they produce Tiago and Tigor wherein Ford used to produce Figo, Freestyle, and Aspire. At the Chennai plant, Ford earlier used to manufacture Ecosport and Endeavor SUVs. Located

Ford’s Decision to Leave India

Ford Company had decided to stop all manufacturing operations in India; this may be the result of a proposed joint venture with Mahindra that had fallen through early last year. Following this, the company had decided to wind down its manufacturing process in the nation and cut its operating losses which stood at more than 2 billion over the past 10 years.

At the Chennai plant, about 4,000 employees have been impacted by this closure, even as Ford has ensured that it might help the employees, unions, dealers, suppliers as well other stakeholders in Chennai and Sanand from where the company would be manufacturing engines for exports to make sure to have a fair deal. However, now with the Tata group about to take over, there should be a smoother transition. 

According to industry experts, the TN unit may get well with the ambitious electric vehicle (EV) plans by Tata Motors. In Tata Motors’ annual general meeting this year, Tata Sons Chairman Mr. N. Chandrasekaran said that EVs may contribute to around 25% of the company’s total passenger vehicles (PVs) in the medium to long term, up from 2%.

Tata Motors’ Future Plans

Tata Motors is evaluating to set up a battery plant and hopes to introduce 10 more EV models before 2025. During the July-September quarter in 2021-22, the company sold 2,704 PV EV units, posting 193 percent growth, compared to the same time last financial year. The factory of Chennai Ford India annually generated the potential of about 200,000 vehicles and 340,000 engines.

Reportedly MG Motor India had also discussed with the governments of TN and Gujarat for procuring the US auto major’s manufacturing establishments at Sanand (Gujarat) and Chennai.

When asked about this, Gaurav Gupta, a chief commercial officer of MG Motor India, had refused to comment on this in a recent interaction with Business Standard. Before the closure announcement last year, the American automobile major was in talks with companies like Ola for contract manufacturing and M&M for cross-badging and a new product alliance.

Soon after the announcement of the closure of the unit on September 9, the state government of Tamil Nadu came out in public, stating it would ensure the smooth handover of land to another automobile player. If the state government finds a major player like Tata Motors to take over the unit, it may be reassuring for over 2,600 employees and workers of the ancillary units at Maraimalai Nagar.

For Tata Motors, all the lines have been opened for the takeover of Ford India’s passenger vehicle manufacturing unit in Sanand, located 40 km away from Ahmedabad.

For the transfer of ownership of Ford’s passenger vehicle manufacturing plant to Tata Motors, both the auto giants have fulfilled an agreement to the undertaking.

Soon after the American auto major declared openly its departure from India last year, both the corporations had meetings before Tata Motors’ takeover of the Ford plant (Tata Motors took over Ford India) in Sanand, confirming a source in Ford India.

With a venture of Rs 4,500 crore and a capability of assembling 1.5 lakh units per annum, Tata Motors was one of the foremost entrants in Gujarat’s Sanand. The plant presently manufactures Tigor, Tiago, and Tigor EV variants.

The passenger vehicle plant was planned to close down in December 2021. However, the company postponed it till March 2022 in a bid to achieve order obligations – mainly of auto components required in Ford cars.