Ford Motor Company is expected to firm up its capital allocation plans for India in the second half of 2021, a senior executive said in an email to the staff as the automaker plans to reveal its strategy in a loss-making market. In a separate statement released earlier, the US-based auto giant stated that it has tasked senior executive Steven Armstrong with evaluating investment plans for India in his new role as transformation officer, South America and India.
Dianne Craig, president of Ford's International Markets Group (IMG), said in an email to staff on Wednesday, referring to India,
We have a lot of work to do as we continue to assess our capital allocations in the market. While we expect to have an answer in the second half of this year, the appointment of Steven...will help focus our efforts and speed up the process.
Mr Anurag Mehrotra, Head of Ford India will report to Armstrong, who previously headed the Changan Ford JV in China. Armstrong took on his new role from May 1, the company stated. Confirming that the company expects to reach a capital allocation decision in the second half of the year, a Ford India spokesman said that India is an important market and a source of global powertrains for its Ranger SUV.
Ford has previously stated that it will allocate capital consistent with its plan to generate consistently strong cash flows and achieve an 8% company adjusted EBIT (Earnings Before Interest and Tax) margin. The manufacturer just beat Wall Street’s first-quarter profit estimate on Wednesday, telling investors all its markets under the IMG were profitable, except for India. Previously, sources have said that while Jim Farley, CEO, Ford Motor Company wants to boost profits in India, the plan is currently not at the top of the list of priorities.
It must be noted here that Ford has struggled with the sales volumes for many years now. In line with this, there have been numerous speculations of the carmaker giving up on our market in near future. Thanks to a similarly lacklustre sales performance, General Motors exited the Indian market in 2017 after two decades of struggling. Even Harley-Davidson recently left the market after a decade of slow sales. Ford entered the Indian market 25 years ago with the Escort, but currently has a less below 2% share in the passenger vehicle market. The automaker had entered a JV with Mahindra & Mahindra, which would have allowed it to launch new vehicles at a much faster rate while keeping costs down. However, the two companies parted ways even before this partnership could bear fruit.