Ford India has announced that it will stop manufacturing vehicles in the country for local sales with immediate effect. However, production for exports will be ceased gradually. This news has stirred the industry. FADA, Federation of Automobile Dealers Association, has said that the entire auto retail fraternity is shocked by Ford India’s decision.
FADA has released a press statement on account of Ford India’s shocking announcement. Speaking in this regard, FADA President Mr Vinkesh Gulati, said, "The Auto Retail fraternity is really shocked to hear another US Auto Major, Ford India's announcement where it has said that it will shut down production with immediate effect. While trying to handle dealer anxiety, Ford India President & MD, Mr Anurag Mehrotra called me personally and assured that they will adequately compensate dealers who continue to offer vehicle service to customers.”
He further added, “Though this is a good beginning, it is not enough as there are ~170 dealers who in-turn have ~391 outlets and have invested ~INR 2,000 crore for setting up their dealerships. While Ford India employs 4,000 people, dealerships employ around 40,000 people without displacing them from their home locations thus being continuously skilled and up-skilled all this while.”
The press release also stated that Ford India dealers currently hold ~1,000 vehicles which amount to ~INR 150 crore via inventory funding from reputed Indian Banks. They also carry demo vehicles which are 100s in numbers. Moreover, Ford India also appointed multiple dealers until 5 months back. Such dealers will be at the biggest financial loss in their entire life.
FADA has been requesting Governing of India to roll out Franchisee Protection Act as due to its unavailability, auto dealers are not adequately compensated like their counterparts in many other countries, where this law exists. After General Motors, Man Trucks, Harley Davidson, UM Lohia, and multiple electric vehicle brands, Ford India is the 5th biggest exit from Indian markets since 2017.
Parliamentary Committee on Industry in its report number 303 which got released in December 2020 had recommended the Ministry of Heavy Industries that the Government should enact the Franchise Protection Act for Automobile Dealers in the country, so that it is a win-win for both, the Auto Original Equipment Manufacturers (OEMs) as well as the Auto Dealers, but will also be beneficial to customers in the long run.