What Stimulated Ford’s Demise In India?

What Stimulated Ford’s Demise In India?

Ford vehicles were well-engineered, set a standard for driving dynamics, were inexpensive to purchase, and later became inexpensive to operate. And, unlike many global corporations that abandoned diesel, Ford invested in BS6 diesel technology with the idea that India still had a sizable diesel car market.

However, due to “huge cumulative losses and lack of development in a competitive market,” Ford Motor Company was obliged to discontinue manufacturing in India and close two facilities on September 9. Over the previous ten years, the brand claims to have lost more than $2 billion in operational losses. It plans to sell imported automobiles in the country as part of a reorganization attempt. The news was unexpected and created quite a commotion.

So, what went wrong with Ford? It was certainly not due to a lack of devotion. In truth, the American automaker adopted the same business model in India as some of its enormously successful rivals, such as Hyundai. Yet, after 27 unsuccessful years, it failed to break the Indian code. This is because this code does not appear in any rule book, strategy plan, or PowerPoint presentations for which consultants charge millions of dollars.

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Ford’s Expedition

Ford, the world’s fifth-largest carmaker, was one of the first major global auto brands to join the country after changes opened up one of the world’s fastest-growing vehicle markets to international companies. Since 1996, when it Initiated the investment of an initial investment of $ 1 billion, the renowned automaker has invested over Rs 12,800 crore in India.

In FY2000, Ford sold 8,000 PVs in India, and by FY2021, it had sold 48,000. Ford has increased the number of vehicles sold in India during the previous two decades. However, this did not help the company gain market share.

Lack Of Models Variation

Another element that led to the brand’s low success. Ford concentrated on Ikon for an extended period while other automakers continued to create new models. It ultimately introduced a few models, but it was too late, and the automaker was already lagging in the competition.

When dealer supplies of models like the Figo, Aspire, Freestyle, EcoSport, and Endeavor are depleted, the company will discontinue selling them. However, it will continue to provide customer service for these automobiles.

The company’s closure was attributed to declining sales and more than $2 billion in operating losses. Still, some experts believe it reflects the company’s inability to recognize its core Indian customers and their necessitates and then produce some suitable ads that would have made at least some impact on the brand.

Misjudging The Indian Consumer And Spending Power

Ford was one of the first multinational corporations to enter India, but it badly misunderstood the Indian customer. After decades of being denied the latest things, the reasoning went, Indians would gobble up everything a worldwide brand gave. The failure of Ford’s first model, the Escort, served as a wake-up call. The Escort featured an outdated 1.3-liter gasoline engine, no power steering (though the diesel did), and no power windows for the back passenger. Indian customers rejected it.

For a long time, little vehicles dominated the Indian market. Like Maruti Suzuki and Hyundai, Ford failed to prosper in the market by focusing on tiny cars. While the rest of the country was preoccupied with gas mileage, Ford was preoccupied with engine power and performance. On the other hand, some automotive manufacturers, most notably Maruti Suzuki, Hyundai, and Tata Motors, provided purchasers with the necessary ingredients.

Customers Were Disappointed By High Service Costs

The reality of the Indian market hit hard, and Ford realized that it couldn’t just parachute one of its worldwide products into the Indian market and that it needed to design something specifically for the Indian market. Repair shock was prevalent, giving Ford a reputation for high ownership expenses, which hurt sales and impacted resale value, causing significant harm to the brand. Fords have a reputation for being costly to repair. The importance of owning an expensive car service clung to the business like a nasty odor took Ford more than a decade to solve the cost of maintenance issue by offering cheaper supplies and services than competitors and spending millions of dollars on marketing to overcome the image. Unfortunately, it was too late by then.

Ford’s Inadequate Shareholder Participation in India

 Ford’s management was viewed as aloof and uninterested. Having a foreigner as the CEO of Ford India may have affected the company’s ability to interact effectively with Indian partners. Ford’s India operation was led by foreigners, which set it apart in a market where pricing and relationships were crucial.

BVR Subbu, an Indian, was Hyundai’s CEO for ten years. Hyundai’s Indian leadership was always eager to communicate with all stakeholders, and they were effective in portraying a favorable image of the company, its services, and its India focus. Indians were also in charge of Maruti Suzuki.

What About Existing Ford Owners?

Ford has declared that it will continue to provide automobile aftermarket parts, maintenance services, and warranty support to its customers in India. However, it will work with its distribution network to reorganize and ease the transition from sales and service to parts and service support.

Conclusion

Ford India was never a significant player in the Indian market. Consequently, its demise will not substantially boost the market’s other automakers. In FY21, the firm had a 3.3 percent market share in U.V. Following Ford’s exit, other manufacturers will attempt to fill the hole with their U.V. solutions. Due to increasing losses of more than $2 billion, the carmaker argues it is no longer viable to continue operations. Experts highlight why Ford India’s marketing is a crucial component of its failure since it lacks the volume and effect of its competitors.