Multiple sources familiar with the negotiations tell ET that Tata Motors is in advanced talks to acquire Ford India’s Sanand facility in Gujarat, multiple sources familiar with the negotiations tell ET. A withdrawal from the local automobile market had been indicated by the US automaker as far back as September of last year.
After the sale of the factory, Tata Motors and Ford India have approached the local administration in Gujarat to find out how incentives will be structured for Ford’s Sanand facility . This indicates that Tata Motors is the leading bidder.
In September of last year, the American carmaker announced its departure from the local market. One of the two Ford factories in India is in the hands of Tata Motors. MG Motor and Bhavish Aggarwal-promoted Ola are among its competitors for the manufacturing plant.
All of Tata Motors’ domestic plants are now operating at 85% of capacity. During FY23, the company expects to build between 5,000 and 600,000 vehicles in-house. In order to increase production, Ford needs to acquire a facility like the one it now has.
In the extremely competitive passenger vehicle market, Tata Motors has already ascended to third place and is beginning to fight with Hyundai Motor India for second place. Ford India, on the other hand, is remaining flexible.
There is a chance that the American automaker will also produce electric vehicles for export to India.In order to take advantage of India’s Production-Linked Incentive (PLI) programme, research will be conducted to identify the model that will be manufactured in India for worldwide markets.
Due to the fact that Tata Motors is willing to acquire Ford’s manufacturing with its employees, it appears to be the leading competitor. However, only one factory will be sold as part of the deal. Another plant might be used to export electric vehicles, which is now being considered, “a person privy to the discussions said.”
In the sale of the Sanand site, Ford did not include the engine factory, which is used as the main export base for the Panther engines. As a result, the proposed transaction does not cover it. Just weeks after declaring its exit from the Indian market, the US parent company invested more than INR 5,000 crore in its Indian subsidiary.
INR 5,075 crore has been invested in two tranches: INR 2,175 in September and INR 2,900 in October. Ford India’s representative addressed the PLI programme, stating: “Ford is considering using a factory in India as an EV production export base.
Now we’re only beginning to look into it. Until further notice, we are unable to provide any additional information at this time. ” As part of its efforts to promote EVs around the world, Ford is creating a separate entity, which it has already partnered with the Volkswagen Group to share the EV architecture.
Both Ford and Volkswagen have exported automobiles from India, so experts suggest a Ford-VW joint export operation could be an option for the US business. The Mustang and Mach-E will certainly arrive in India in 2024, even though Ford has left the mainstream market.
Pre-tax special item charges of nearly USD 2 billion were scheduled to be taken by Ford, which included USD 600 million in 2021, USD 1.2 billion in 2022, and the rest in the next years and years. About USD 1.7 billion of this amount will be paid out in cash in 2022, mainly for settlements and other payments.
Accumulating losses and declining sales forced Ford Motor Co. to shut down its operations in India. Its industrial plants and business headquarters employ more than 4,000 people who have been affected by the decision.
Published by – Kiruthiga K
Edited by – Kritika Kashyap
